The SEC’s ongoing exams can be a pain point for financial firms, as no one wants to be caught unprepared. Deficiencies can result in a fine or other action. The SEC wants to know that you are making every effort to address compliance issues and close any possible gaps.
The good news is that you’ll have a good start on preparedness if you have addressed the most basic issues.
Knowing what red flags set off alarm bells with the SEC will help calm the panic when you receive notice that you are going to be examined. Here are some of the biggest red flags from a IT perspective:
- A “canned” policy template that is not specific to the firm or is outdated and does not address current regulations.
- Lack of written policies and procedures. Written policies must be specific to the firm, and reviewed annually.
- Not designating a chief compliance officer, whether internal or outsourced, to be responsible for overseeing the firm’s policies and procedures. The CCO must also document a review of the policies and procedures at least annually to ensure effectiveness and adequacy.
- Lack of technology to archive business-related email and correspondence. Such emails and instant messages must be retained and accessible on demand for a minimum of five years.
ACE IT Solutions was voted Best IT Service for Small & Start Up Firms by 2018 HFM US Hedge Fund Technology awards. We help our clients meet rigorous compliance regulations by providing them with best-in-class technologies and services.
Contact ACE IT Solutions for more information about using technology to help your firm meet SEC regulations.