I was clearing out some old folders on my computer the other day and came across a list of the ten most common compliance deficiencies found by SEC examiners . . . in 2004! And you know what? In the ensuing 12 years, not much has changed. The list is provided below and in subsequent posts I will take a deeper dive into each issue and discuss what the SEC found then and how you can best address that issue now.
1. Failure to Disclose
2. Weak Internal Controls
3. Failure to Maintain Books and Records
4. Failure to Comply with the Custody Rules
5. Failure to Accurately State Performance
6. Failure to Obtain Best Execution
7. Personal Securities Transactions that Create Conflicts of Interest
8. Incorrect Calculation of Advisory Fees
9. Failure to Supervise
10. Failure to Adhere to Client Mandates
I suspect if we could dig up a list of compliance deficiencies from 1940 it would look much the same.