SEC IA Rule 204A-1 requires all of an investment adviser’s access persons to report, and compliance to review, their personal securities transactions and holdings periodically. Section (3)(I) has an exception for
(3) Exceptions from reporting requirements. Your code of ethics need not require an access person to submit:
(i) Any report with respect to securities held in accounts over which the access person had no direct or indirect influence or control;
Way back in 2015 the Division of Investment Management released Guidance 2015-03 about what it means for an access person to have no direct or indirect influence or control over the account for purposes of relying on the reporting exception.
There are three themes that fail the exception:
- suggesting purchases or sales of investments to the trustee or third-party discretionary manager;
- directing purchases or sales of investments; or
- consulting with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in the account.
Effectively, the SEC asks compliance to do some diligence on the account and the person running the account to make sure the access person is blocked from making investment decisions.
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