Compliance Policy and Procedures Manuals

Is your firm in Compliance?

On February 5, 2004, the United States Securities and Exchange Commission adopted SEC Rule 206(4)-7 of the Investment Advisers Act of 1940 requiring SEC registered firms to adopt and implement written compliance policies and supervisory procedures and to designate a chief compliance officer to administer these compliance policies and procedures.

Rule 206(4)-7 does not enumerate specific elements that must be included in an Advisor's policies and procedures, however, regulators expect such policies and procedures (at a minimum and to the extent relevant) to address:

  • Code of Ethics and trading by Access Persons
  • Managing and disclosing Conflicts of Interest
  • Portfolio Management (allocation of investment opportunities, consistency with client guidelines)
  • Trading practices (best execution, soft dollars, allocation of aggregate trades)
  • Safeguarding of client assets
  • Valuation of client assets
  • Calculation and disclosure of fees
  • Accuracy of disclosures made to investors
  • Review of advertisements
  • Maintenance and security of required records
  • Safeguards for the protection of client records and personal information
  • Business Continuity Plans

How important is the quality of your manual? The SEC has been actively issuing deficiencies and/or sanctions to advisors that have incomplete or inaccurate policies and procedures manuals. Utilizing a generic manual that includes policies that are not consistent with your ADV and/or business practices will put your firm at risk. Further, it is the responsibility of Chief Compliance Officer to assess the completeness and effectiveness of the compliance manual as part of the annual Rule 206(4)-7 Report.

MainStay will work closely with your firm to draft a custom Compliance Policy Manual and Supervisory Procedures that are tailored to the investment and business practices of your firm. Whether you have an existing manual that you want enhanced or are starting from scratch, our professionals are here to assist.

For a free consultation and to learn more about our qualifications, please Contact Us.