As the new year begins, it is important for investment managers and other investment management professionals to review the array of regulatory requirements they are obligated to fulfill.
We hope that this Regulatory & Compliance Calendar and Guidebook 2024 and accompanying materials will be a useful tool for managing compliance requirements throughout the year.
Regulatory & Compliance Calendar and Guidebook 2024
In assessing your 2024 compliance strategy, it is important to keep in mind not only individual requirements and best practices, including the new rules and amendments to the Private Fund Adviser Rules, but also the larger themes defining the regulatory and enforcement environment.
Investment managers should review these themes in light of operational and compliance challenges they have faced and how they have modified their compliance programs to adapt to these changes. In our view, the SEC continues to send four clear messages:
- Transparency is a priority. The SEC is quick to act in cases where there is a lack of required disclosure or a conflict of interest, and in cases where an investment manager made a material misrepresentation. Firms should endeavor to be scrupulously transparent in their arrangements and transactions.
- Policies and procedures are just the start. Firms need to have a solid infrastructure that translates policies and procedures into actions and behaviors. This includes controls, internal audit functions, and appropriate and timely escalation protocols. Moreover, firms must act on and follow policies and procedures in a way that reasonably ensures compliance with such policies and procedures and applicable law.
- Compliance needs to be approached holistically. Compliance procedures cannot be applied in a check-the-box fashion. Firms must implement a risk-based approach driven by thorough due diligence of clients, employees, and vendors.
- All investment advisers are fiduciaries. Under the Advisers Act, all investment advisers are fiduciaries. Generally, investment advisers owe their clients a fiduciary duty comprised of the duty of care and the duty of loyalty. The SEC views an investment adviser's fiduciary duty as important to its investor protection efforts. All investment advisers, regardless of whether they are registered with the SEC (or otherwise exempt from registration), should conduct all their activities in a manner that takes into account their fiduciary duties to clients.
Investment managers that follow a rigorous application of regulatory requirements while keeping an eye on big-picture trends will be well-positioned to avoid both the tangible and intangible costs that come with compliance shortfalls.
We look forward to working with you in the year ahead.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.