Investment Adviser - Compliance Procedures

SEC Requirement

The SEC Compliance Program Rule requires all advisers registered with the SEC to adopt policies and procedures that take into consideration the nature of the firm's operations. The policies and procedures should be designed to prevent violations of the Advisers Act from occurring, detect violations that have occurred, and correct promptly any violations that have occurred.

In designing its policies and procedures, the SEC expects each adviser, to first identify conflicts and other compliance factors creating risk exposure for the firm and its clients, in light of the firm's particular operations, and then design policies and procedures that address those risks. In the adopting release to the Compliance Program Rule, the SEC set forth a number of areas that most advisers should address in their policies and procedures.

SCA Response

SCA has developed best practices for the areas covered in the Adopting Release and other areas that may represent conflicts of interest for many firms. SCA revises these procedures frequently based upon information released by the SEC, enforcement actions, and input from our clients.

SCA is known for providing comprehensive customized procedures to its clients that incorporate the best practices for each firm with the compliance infrastructure already in place. For start-ups, SCA spends studies each firm’s advisory practice and then designs procedures that will address those areas where conflicts are most likely to arise. SCA’s procedures have withstood SEC inspections since the Compliance Program Rule went into effect.

For those firms that wish to design their own compliance program, SCA offers its best practices for use as a guide. SCA discourages any firm from purchasing an “off the shelf” compliance manual, unless they plan to customize the manual to address its particular business.