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SEC Examination Guidelines and FAQs on Form CRS

The SEC has issued guidance addressing the Form CRS. The first is a Risk Alert from the Office of Compliance Inspections and Examinations (OCIE) indicating that OCIE will be looking for good faith compliance when it conducts examinations after the June 30, 2020 Form CRS compliance date. The second includes additional FAQs providing clarification on delivery and filing requirements along with several other topical areas. We discuss the examination guidance and the FAQs in more detail in an alert on our website for those looking for more in-depth analysis. Also, note that the CRS Risk Alert was issued concurrently with a similar Alert on Reg BI examinations in general, which is the subject of a separate post on this site.

As SEC Chairman Clayton previously indicated, the compliance date of Form CRS will not be extended, but the “initial” examinations will focus on whether firms made “a good faith effort to implement Form CRS.” While emphasizing that the Risk Alert is not intended to serve as an explanation of Form CRS requirements, OCIE explains that its initial examinations may include assessment of compliance with the following areas:

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The Word Is Out on SEC Examinations for Reg BI Compliance – the OCIE Risk Alert

On April 7, 2020, the Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert providing guidance for the SEC’s post–June 30, 2020, examinations of firms’ compliance with Regulation Best Interest (Reg BI). This guidance is covered more fully in our Client Alert of April 13, 2020.

In an effort to present transparency in its prospective examination for Reg BI compliance, OCIE’s Risk Alert includes a three-page Appendix that provides an example of an OCIE Reg BI examination document and information request list. OCIE encourages firms to use the documents listed in the Appendix to assess their implementation plans for Reg BI. Firms should study this exemplar request list closely.

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SEC Issues Risk Alert Regarding Reg S-P, Privacy, Safeguarding, and Registrant Compliance

The SEC’s OCIE recently issued a Risk Alert focusing on compliance issues related to Regulation S-P, the primary SEC rule governing compliance practices for privacy notices and safeguard policies for investment advisers and broker-dealers. The Risk Alert summarizes the OCIE’s findings from two-year’s worth of issues identified in deficiency letters to assist investment advisers and broker-dealers in adopting and implementing effective policies and procedures for safeguarding customer records and information pursuant to Regulation S-P.

In this alert, partner Jim Lundy outlines the Regulation S-P requirements, the OCIE’s Regulation S-P findings and key takeaways for SEC registrants.

The SEC’s 2017 Cybersecurity Alert and New Cyber Unit

In August 2017, the SEC’s Office of Compliance Inspection and Examinations (OCIE) issued a Risk Alert outlining observations from its “Cybersecurity 2 Initiative,” which was built upon its 2014 “Cybersecurity 1 Initiative.”  Notably, this alert offered a rare industry compliment, describing “an overall improvement” in cybersecurity practices and processes since the Cybersecurity 1 Initiative.  Below we summarize the OCIE staff’s observations, certain criticisms and their descriptions of robust policies, procedures and practices.
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