Regulatory Round Up - August 2024

Rule 206(4)-7 under the Investment Advisers Act of 1940 requires firms to annually evaluate the adequacy and effectiveness of their compliance policies and procedures. Throughout the year, the monthly compliance calendar of tasks (or “testing” measures) is meant to “analyze information over time” to determine the effectiveness of a firm’s compliance policies and procedures. This month True West educates firms on the need for developing a comprehensive compliance monitoring/testing program and reminds firms of the three types of testing measures. Firms who demonstrate AND DOCUMENT the effectiveness of ongoing supervision of their compliance program will be much stronger going into their next SEC/State exam.

During 4th quarter, the goal during the annual review process is for the firm’s compliance personnel to focus on reviewing the testing which occurred throughout the year and summarizing the testing results conducted throughout the last 11 months and any new compliance policies adopted or modified over the year. True West stresses the importance of maintaining the compliance calendars each month.