U.S. SEC faults new advisors for compliance shortcomings

In recent audits, the U.S. Securities and Exchange Commission (SEC) discovered that some advisers had poor compliance rules and processes, according to a risk advisory issued on 27 March 2023. For example, advisers used compliance processes that were not targeted to their companies or risks, or they outsourced compliance activities without evaluating how third parties performed them. In addition, they dedicated insufficient resources to compliance.

In addition, the SEC discovered disclosure omissions and errors pertaining to fees and remuneration, business or operations, client services, disciplinary information, websites and social media accounts, and conflicts of interest. “The staff observed adviser marketing materials that appeared to contain false or misleading information, including inaccurate information about advisory personnel professional experience or credentials, third-party rankings and performance,” the alert states. “Advisers were also unable to substantiate certain factual claims.” New advisors should heed the risk alert and be prepared for the SEC’s initial probe.


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Thursday, 21 March 2024
Thursday, 20 March 2025