The SEC’s Office of Compliance Inspections and Examinations ran a sweep it called the Multi-Branch Initiative. It published a risk alert on November 9 with its findings.
The Risk Alert is mostly a collection of typical compliance problems:
- Custody of client assets
- Fees and expenses
- Oversight and supervision of supervised persons
- Advertising
- Code of ethics
- Portfolio Management
- Oversight of investment recommendations
- Mutual fund share class selection and disclosure issues
- Wrap fee program issues
- Rebalancing Issues
- Conflicts of Interest Disclosures
- Trading and allocation of investment opportunities
A few things were related to the multi-branch or heightened by that geographic spread of offices. The big issue is that policies and procedures were inconsistently applied across offices. That makes me think that the physical presence of compliance personnel may be a positive factor of compliance. A compliance professional once called this “Compliance by walking around.”
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