Implementation of Your SEC Compliance Program 


A Compliance Officer's Best Tools and Tips for the SEC Exam Process

On September 13, MyComplianceOffice co-hosted a webinar with Milne Legal. Our presenters Dustin Milne, Charles Lerner and Laetitia Mantel discussed what an investment advisory firm outside of the US needs to consider when dealing with the US. This included discussions on what defines a US person, when to register with the SEC, how to handle a SEC exam and what sort of compliance program you should have in place.

 You can download a full copy of the slides from this webinar.


Full video transcript available below:

My name Latisha Monto. I'm a senior compliance consultant at Milne Legal here. As mentioned by Dustin before, even if today's presentation is held in English, I also wanted to highlight that we service our European clients in their mother language.

[foreign language 00:24:25]

As we mentioned, when you've established that you have to register with the SEC, you must implement your compliance program starting with the compliance manual. Your manual obviously should be tailored to your business, not one of those off-the-shelf manuals you may find on the internet. Typically your compliance manual will describe your policies and procedures as well as your Chief Compliance Officer's responsibility.

On slide 14 you'll see a lot of these topics. First off all, appointing your Chief Compliance Officer which is mandatory. You see that on the top left, CCO Mandatory. The Chief Compliance Officer must be knowledgeable and able to carry out your program. He will then implement these policies and procedures for each of these topics that are relevant to your advisory business. According to the SEC, there's no grace period so your compliance program must be ready to run at the time you file your ADV and book your first client.

Charles will go into more detail later, but all these required books and records, to name a few, the Fiduciary Duty to Clients, which is the highest standard of care: you always act in the best interest of your client. The Best Execution Duty monitors execution prices, stock orders, trade errors ... Really, here's an overview of all these required books and records. You should really look into each one of them to determine if it's applicable to your business.

Latisha, let me ask you ... in working with the CCOs and helping them work and develop their compliance program, what do you think are the areas that are most overlooked?

 Thank you Charles. There's a few, for example, business continuity plans, on the top of my head. Some of these checks and control might not be familiar or even comfortable for European advisers such as insider trading procedures and duties to provide, meaning that your Chief Compliance Officer should be collecting personal account statements from all employees. Also all your employees should ask for his approval before they trade in their personal accounts.That is obviously a very sensitive topic. Here at Milne Legal we support European Chief Compliance Officers when they implement these policies and procedures. It also has them to monitor, test, and document those checks.

Next slide please. The examination authority of the SEC is unconditional and non-U.S. advisers are indeed subject to examination by the SEC. As a first step, the SEC will ask non-U.S. advisers to send documents to the SEC in the U.S., such as your policies and procedures, you previous annual review, your compliance manual. Whenever the SEC decides to come to Europe to examine investment advisers, then that's a question or a client [inaudible 00:27:57]. Because the SEC does not have jurisdiction in Switzerland or in Lichtenstein, they would contact the local regulator first. In case of Switzerland, they would work together with FINMA.

Later Charles will describe more enforcement action already brought by the SEC against European advisors. Next slide please.

Now this enforcement action is interesting. It was brought against an adviser just last year in September 2015. That illustrates how important it is to have written policies and procedures in place.An advisers here claims to establish the required cyber-security policies and procedures, which is also currently on the SEC hot button list ... I'd like to highlight that once an adviser has established required policies and procedures, he must also test and document each one of them because the SEC frequently states that during examination they find out that investment advisers fail to do what they say they would do in their compliance program.

Next slide please. Looking at the SEC comments on the previous enforcement action. It's positioned very clear. Firms must have procedures in place. It is important to enforce the safeguard rules even in cases like this where there is no apparent financial harm to clients. Needless to say that once you've established a good compliance program with well organized and well documented books and records, you will also speed up any examinations by the SEC.


This webinar was co-hosted with Milne Legal. To learn more visit 

Find out how MCO can help

Request a demo today to learn how MyComplianceOffice puts you in command of your compliance program, synchronizing your business needs with regulation. 

Request a Demo



Download our four page Portfolio of Solutions to learn about;

  • Personal Trade Monitoring
  • Gifts & Entertainment
  • Political Contributions
  • Third Party vendor risk management
  • Trade surveillance
  • And more

Brochure Download