Investment advisory firm principals and in-house counsel and compliance staff often ask whether their documented efforts at good compliance will simply make their firms “look bad” when such documentation is reviewed during an on-site regulatory examination. The question arises from the fact that the documentation includes the logging of deficiencies and cataloguing of remediation efforts, including decisions to discipline firm personnel. Another common question is whether there are strategies for approaching compliance reviews and documentation that will allow newly registered firms to shine during their initial on-site SEC examinations.
In this memorandum, Richards Kibbe & Orbe LLP partner Michael D. Mann, who regularly counsel investment advisory firms as part of the Firm’s Regulation and Compliance practice, expresses his view that documentation that reflects a robust compliance review process and commitment to remediate identified issues will be beneficial, as it will evidence strong tone at the top and foster regulators’ confidence in the firm. The memorandum outlines strategies for approaching compliance reviews and documentation that the authors believe will permit firms that implement them to create proverbial gold out of what could be viewed as the lead weight of the compliance requirements confronting registered investment advisers.