The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) published a list of the five compliance topics most frequently identified in deficiency letters that were sent to SEC-registered investment advisers.

Below are the 5 topics, which essentially are the bulk of advisor compliance requirements. What’s most relevant are the (bulleted) examples within each of the 5 topics.

(1)  Compliance Rule  [Rule 206(4)-7 under the Investment Advisers Act of 1940]   

• Compliance manuals are not reasonably tailored to the adviser’s business practices.
• Annual reviews are not performed or did not address the adequacy of the adviser’s policies and procedures.
• Adviser does not follow compliance policies and procedures.
• Compliance manuals are not current.

(2)  Regulatory Filings

• Inaccurate disclosures
• Untimely amendments to Form ADVs
• Incorrect and untimely Form PF filings
• Incorrect and untimely Form D filings

(3)  Custody Rule [Rule 206(4)-2]

• Advisers did not recognize that they may have custody due to online access to client accounts.
• Advisers with custody obtained surprise examinations that do not meet the requirements of the Custody Rule.
• Advisers did not recognize that they may have custody as a result of certain authority over client accounts.

(4)  Code of Ethics Rule [Rule 204A-1]

• Access persons not identified
• Codes of ethics missing required information
• Untimely submission of transactions and holdings.
• No description of code of ethics in Form ADVs

(5)  Books & Records Rule [Rule 204-2]

• Did not maintain all required records.
• Books and records are inaccurate or not updated.
• Inconsistent recordkeeping.