In this month's edition of True West's Regulatory Round-Up, we highlight the importance of documenting the firm’s required reviews and filings. Firms must ensure all necessary documentation is in place for their compliance policies and procedures, particularly regarding regulatory filings such as Form 13F. This form is required for firms with over $100 million in 13F reportable securities, and the SEC has been scrutinizing firms for evidence of these filings or valid reasons for exemptions.
A notable tip this month is to update cybersecurity procedures. With the SEC’s continued focus on cybersecurity, firms should document any training or testing that has occurred and ensure all practices are current and effective.
Another critical area is the annual amendment to Form ADV. Firms must file this amendment within 90 days of their fiscal year-end, ensuring all material changes are disclosed to clients. Consistency between Form ADV Part 1A and Part 2A is vital, and firms should maintain detailed notes to substantiate reported figures. Additionally, Standing Letters of Authorization (SLOA) and third-party money movements must be accurately documented to comply with the SEC’s no-action letter.
The round up also emphasizes Regulation Best Interest (Reg BI) compliance. Recent SEC examinations have focused on how firms disclose their capacity (whether acting as brokers or advisers) and address conflicts of interest. Firms must ensure clear policies and procedures are in place and that all disclosures are reasonable and diligent.
February's CCO checklist includes updating client lists, reviewing marketing materials, confirming no breaches of client information, and finalizing the annual compliance review for 2023. Firms are also reminded to complete their DOL PTE-2020-02 retrospective review and to document any actions taken regarding inactive accounts to avoid Reg BI scrutiny.
As True West approaches its first anniversary, the founders reflect on their journey and emphasize the importance of the “Code of the West” values in their operations. They invite clients to provide feedback, suggest educational topics, and offer testimonials for their upcoming website update.
By adhering to these guidelines and maintaining thorough documentation, SEC-registered firms can better navigate the regulatory landscape and protect their operations.
