Regulatory Round Up - January 2024

Key definitions for regulatory assets under management (RAUM) are provided, highlighting the criteria for counting assets under continuous and regular supervisory or management services. The newsletter also offers a link to the SEC’s FAQs for additional guidance.

The SEC’s 2024 exam priorities include promoting compliance, preventing fraud, monitoring risk, and informing policy. Key areas of focus are marketing, compensation, valuation, and disclosure assessments. The SEC has emphasized the importance of accurate and complete regulatory filings, particularly Form CRS, and will continue aggressive enforcement actions in these areas.

The January exam tip focuses on third-party ratings and awards, with the SEC requesting documentation of any ratings or rankings used in advertisements. Firms should ensure they have copies of questionnaires, contracts, and due diligence documentation for all third-party ratings.

Cybersecurity remains a critical concern, with a spotlight on domain spoofing. This type of cyber-attack involves criminals purchasing domain names similar to legitimate ones to trick users into sharing sensitive information. Firms are advised to educate their employees and customers about recognizing and verifying phishing attempts and domain spoofing.

The CCO toolbox for January includes resources such as the ADV annual amendment checklist, annual attestations for access persons, disclosure of outside business activities, and a DOL retrospective review template. A one-pager on domain spoofing is also provided to educate staff and mitigate cyber risks.

The monthly CCO checklist covers various tasks, including updating client lists, reviewing marketing materials and financials, confirming no breaches of client information, and conducting random portfolio reviews. Preparing for IAR CE requirements and continuing to work on annual compliance reviews are also emphasized.

By adhering to these guidelines and maintaining thorough documentation, SEC-registered firms can ensure compliance and effectively navigate the regulatory landscape in 2024.