OCIE targets branch offices of advisors

Regulatory team

Cadwalader Wickersham & Taft

15 November 2020

In a risk alert, OCIE questions the performance of these advisory firms with regard to IAA Rule 206(4)-7 (entitled "Compliance Procedures and Practices"). It quibbles with:

policies to limit a supervised person's ability to process client withdrawals, deposits or changes of address;
disclosures of fees and other material information in advertisements and client communications; and
portfolio management, including the way the firms oversee investment recommendations and trade allocations.

OCIE also praises:

consistent and uniform policies and procedures for overseeing things in branch offices regarding (i) the approval of advertisements, (ii) client fee billing and (iii) trading activities;
periodic (at least yearly) compliance testing or reviews at branch offices;
policies for examining the disciplinary histories of supervised persons during the hiring process; and
required compliance training, for the employees of a branch office, that is specific to the branch's areas for improvement.