After analyzing deficiency letters from over 1,500 investment adviser examinations, the SEC's Office of Compliance Inspections and Examinations ("OCIE") released a risk alert regarding the most common deficiencies related to best execution.
Some examples of the most common deficiencies identified by OCIE included:
- Not performing best execution reviews
- Not considering materially relevant factors during best execution reviews
- Not seeking comparisons from other broker-dealers
- Not fully disclosing best execution practices
- Not disclosing soft dollars arrangements
- Not properly administering mixed use allocations
- Inadequate policies and procedures relating to best execution
- Not following best execution policies and procedures
You can read the published OCIE Risk Alert here. We routinely support our clients in the development and implementation of best execution reviews, so please feel free to contact our experts with any further questions.
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.