SEC schedules virtual compliance seminar for investment advisers and funds

The U.S. Securities and Exchange Commission announced on October 6 that it will hold a virtual national compliance seminar on November 19 for investment advisers and investment companies. The event gives chief compliance officers and other senior staff a chance to hear SEC officials discuss issues ranging from information security to conflicts of interest and annual reviews of compliance programs.

The SEC says the seminar is intended to help firms strengthen their compliance programs to protect investors. It is scheduled to run from 8:30 a.m. to 5:30 p.m. Eastern Time and will be livestreamed on SEC.gov. Advance registration is not required, and the agency says participants can submit questions before or during the event. The webcast link is due to appear on the SEC website on the morning of November 19.

What the SEC seminar will cover

The published agenda sets out panels on information security and operational resiliency, registered investment adviser issues, private funds, registered investment companies and the effectiveness of compliance programs. It also includes briefings on current issues. SEC Chairman Paul Atkins is listed for opening remarks, followed by a discussion with the directors of the agency’s Examinations and Investment Management divisions.

The information security panel is scheduled to address regulatory compliance and incident response, risks involving vendors and other third parties, organizational safeguards, business continuity and redundancy. Those topics put operational planning alongside the handling of security incidents in the morning session. The agenda lists both SEC staff and an industry chief compliance officer among its participants.

The agenda also includes a panel on how compliance programs work in practice. Its scheduled subjects are leadership commitment, training and implementation, annual reviews and assessments, responses to issues, and the integration of compliance when a firm enters new business lines. These are discussion topics on the agenda; the seminar has yet to take place.

Why annual compliance reviews are on the agenda

The annual-review discussion follows a September 14 risk alert from the SEC’s Division of Examinations. The division said investment advisers are required to review their compliance policies and procedures at least annually to assess whether those measures are adequate and effectively implemented. The alert highlighted areas advisers may want to consider in their own reviews and encouraged appropriate changes to review processes.

In its analysis of that alert, KPMG Regulatory Insights identified five areas of focus in the SEC examiners’ observations: timely reviews, complete procedures for carrying them out, alignment with a firm’s own policies and practices, documentation, and corrective action when a review finds problems. KPMG described examples in which advisers skipped years, assessed periods longer than 12 months, or treated training or attestations as substitutes for an annual review.

KPMG also reported examples in the SEC observations involving reviews that missed changes to a business or important risks. The areas it cited included fee billing, proxy voting and custody procedures. It said examiners had observed missing or incomplete review records and instances in which advisers did not make recommended corrective changes. Those findings provide context for the seminar’s planned discussion of annual reviews; they do not establish what speakers will say on November 19.

Who is hosting the event and what happens next

The SEC’s Divisions of Examinations and Investment Management are sponsoring the seminar with the Asset Management Unit of its Division of Enforcement. The agency describes its Compliance Outreach Program as a forum for chief compliance officers and senior personnel to exchange views and experiences with regulators. The program includes an annual national seminar and regional events.

The SEC says the outreach program aims to improve communication and coordination with the securities industry on compliance matters involving mutual funds, investment advisers and broker-dealers. Its stated aim for this event is to help senior personnel improve their programs; neither the announcement nor the agenda establishes that the seminar will lead to changes at firms or to any later regulatory action.

For prospective viewers, the immediate next step is the November 19 webcast. The SEC says questions can be sent ahead of time or during the seminar and that no advance sign-up is needed. Attendance, the substance of the discussions and any effect on compliance practices will only become clear after the event.