Conquering Current Compliance Challenges
June 12, 2019 | 2:00 - 2:30 PM EST
 
RECORDED WEBINARS

Conquering Current Compliance Challenges
Recorded: May 15, 2019 
 
Includes: Best Practices, Key Regulatory Issues and Compliance Tips
 
Includes: 23 Best Practices, 5 Peer-tested tools and 15 No Action Letters

Cybersecurity Strategies to Ensure SEC Compliance, 2nd Edition
Includes: 24 Best Practices, 16 Tools, 4 Risk Alerts and IM Guidance

 
CONFLICTS OF INTEREST OVERVIEW

Advisers to hedge and private equity funds should know the SEC’s Asset Management Unit includes conflicts of interest among its 2015 priorities.
 
Monitoring and disclosing or mitigating conflicts of interest stand at the center of an adviser’s fiduciary duty.  The compliance program rule (Investment Advisers Act section 206(4)-7) instructs that before you write your firm’s compliance P&Ps you “should first identify conflicts  … creating risk exposure for the firm and its clients in light of the firm’s particular operations and then design policies and procedures.”   The SEC has actively encouraged firms to have an exacting approach to spotting and dealing with conflicts. 
 
SEC examiners’ attention to conflicts of interest remains red hot.  “An adviser’s failure to disclose conflicts of interest to clients subject it to possible enforcement action,” says Julie Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit.  She further cautions that there will be “a number of significant conflicts cases this year.”

Getting started

You will want to conduct a conflict inventory.  Go through every facet of your business, sit down with business managers and ask about the practices within your organization.  Rigorously and objectively evaluate your firm, its personnel, its business, its various fee structures and its affiliates.
 
Areas that spark conflicts, Riewe notes, include:
 
  • Principal trades;
  • Side-by-side management;
  • Inter-fund ledning; and
  • Compensation from third parties for recommending investments.

 
Expect the allocation of investment opportunities, risk controls and disclosure, particularly for illiquid and leveraged investment products and higher risk products targeted to senior investors to be scrutinized.

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