SEC Exams of Investment Advisers - Top 10 List

SEC Exams of Investment Advisers - Top 10 List [Posted by by howard@compliance-insights.com]

Everyone loves a Top 10 List, and OCIE Director Lori Richards (SEC's Office of Compliance Inspections and Examinations) did not disappoint. C-I outlines OCIE's current "Top 10 Areas of Focus" and provides a link to the details.

..... 1. Controls Over Valuation. A firm's controls for valuing or pricing securities, with particular emphasis on structured products, illiquid securities or other difficult-to-price securities.
..... 2. Controls Over Non-Public Information / Personal Trading / Code of Ethics. Instances of suspicious trading have increased, so the SEC was to review a firm's controls to prevent insider trading in client, prop or employee accounts. They'll look at the firm's own compliance and supervisory programs.
..... 3. Dealing with Senior Citizens. Examiners are looking at free lunches, marketing, sales and related supervisory processes. Need we say more - it's nothing you haven't heard before.
..... 4. Compliance and Supervision. A key area; examiners want to understand the IA's compliance program to see if it appears designed to capture and manage that particular adviser's compliance risks. Has the adviser conducted a risk-assessment and ID'd its own compliance risks and conflicts of interest, then crafted and implemented procedures to effectively mitigate those risks. Recent conflicts: new revenue-sharing payment streams from IAs to BDs, so as to get on "recommended adviser lists.
..... 5. Portfolio Management. Examiners want to see if securities recommendations and investments made for clients and funds are consistent with the adviser's disclosures and the client's investment objectives and restrictions.
..... 6. Brokerage Arrangements and Best Execution. Brokerage arrangements must be consistent with fiduciary obligations to clients, and that IAs seek best execution, whether it uses soft dollars consistent with its disclosures, and whether the adviser periodically and systematically evaluates the costs and benefits of its brokerage arrangements.
..... 7. Allocations of Trades. Has the adviser disclosed its policies with respect to how it will allocate trades? Examiners look out for "cherry picking" and favoritism in allocations.
..... 8. Performance Advertising, Marketing and Fund Distribution Activities. Claims about past investment performance, ... must contain accurate information, and required disclosures (like conflicts of interest) are included in materials, pitchbooks, etc.
..... 9. Safety of Clients and Funds' Assets. Safeguarding clients' assets from theft. loss and misuse - including custodian arrangements and whether an independent custodian sends account statements directly to clients.
..... 10. Information Processing and Protection. A firm's controls over books and records, disclosures and filings; including business continuity plans.

Link: Speech by SEC Staff, 2/20
http://www.sec.gov/news/speech/2008/spch032008lar.htm?nl042408BLOG2

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Still demand for compliance and legal positions

Go to eFINANCIAL for this and other job news http://news.efinancialcareers.com/JOB_MARKET_ITEM/newsItemId-13201


Industry insiders say there is still demand for client service, investor relations, compliance and legal positions as firms work to keep existing clients from jumping ship during rocky economic times.

"The service side is still surprisingly active," says one senior executive with a top tier Chicago recruiting firm. In this volatile environment, he says, firms know they can't add new assets, so they're "over-delivering" on the service side. "Competitors are literally at the door, waiting to snap up the clients," says the recruiter. "You better have the right people in place to make the calls when you're down 30 percent."

Wide Demand

Service demand exists across asset management, from long-only institutional shops to hedge fund operations. Stuart Rosenthal, senior recruiter with Legend Global Search, sees healthy activity in legal and compliance, in addition to client service.

"We're seeing openings at some of the bulge bracket firms, as well as in the middle market," Rosenthal says. While firms are being "careful with budgets," they're adding attorneys, risk management, and service providers, he says. He also sees demand in the mid-salary range, and describes the market as competitive.

Somewhat Insulated

Even in the wake of Bear Stearns' meltdown, Chicago remains somewhat insulated from the market downturn compared to its coastal counterparts. Recruiters say asset management in Chicago is more diversified than in New York or on the West coast. While activity is slow, Windy City firms are not seeing a "deep dive" in asset management, as the head of one bank's institutional asset management sales force puts it.

"Chicago has been somewhat immune to layoffs," says Jim Geiger, vice president at Analytic Recruiting, which has a strong Chicago presence. "There's been a slowdown in hiring among MBAs and PhDs, but there is still hiring."

Seeking Experience

With so many layoffs, competition for jobs is at an all-time high, Rosenthal observes. Most firms are looking for people with strong backgrounds and experience. Even at the mid-salary levels, employers want someone who can hit the ground running.

"We're always looking at people with a track record," Rosenthal says. Geiger echoes that. "This is not a market where our clients are going to take a chance on someone who is new to the field," he says. "They want a track record or a specific niche."