RIA annual compliance review planner

Every firm. The release says the review “should consider” the year’s compliance matters, business changes and rule changes.

• The policies and procedures, current and past five years 204-2(a)(17)(i)“A copy of the investment adviser’s policies and procedures formulated pursuant to § 275.206(4)-7(a) of this chapter that are in effect, or at any time within the past five years were in effect”
• Records of earlier annual reviews 204-2(a)(17)(ii)“Any records documenting the investment adviser’s annual review of those policies and procedures conducted pursuant to § 275.206(4)-7(b) of this chapter”

Firms that tick: manages client accounts with discretion.

The release: “Portfolio management processes, including allocation of investment opportunities among clients and consistency of portfolios with clients’ investment objectives, disclosures by the adviser, and applicable regulatory restrictions”

• List of discretionary accounts 204-2(a)(8)“A list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client.”
• Powers of attorney and grants of discretion 204-2(a)(9)“All powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof.”
• Written agreements with clients 204-2(a)(10)“All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such.”
• Order memoranda 204-2(a)(3)“A memorandum of each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or instruction.”
• Written communications on advice, funds and orders 204-2(a)(7)“Originals of all written communications received and copies of all written communications sent by such investment adviser relating to: (i) Any recommendation made or proposed to be made and any advice given or proposed to be given; (ii) Any receipt, disbursement or delivery of funds or securities; (iii) The placing or execution of any order to purchase or sell any security …”

Firms that tick: places client trades (block orders, research paid with brokerage).

The release: “Trading practices, including procedures by which the adviser satisfies its best execution obligation, uses client brokerage to obtain research and other services (‘soft dollar arrangements’), and allocates aggregated trades among clients”

• Order memoranda 204-2(a)(3)“A memorandum of each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or instruction.”
• Written communications on advice, funds and orders 204-2(a)(7)“Originals of all written communications received and copies of all written communications sent by such investment adviser relating to: (i) Any recommendation made or proposed to be made and any advice given or proposed to be given; (ii) Any receipt, disbursement or delivery of funds or securities; (iii) The placing or execution of any order to purchase or sell any security …”

Every firm.

The release: “Proprietary trading of the adviser and personal trading activities of supervised persons”

• Code of ethics, violations, acknowledgments 204-2(a)(12)“A copy of the investment adviser’s code of ethics adopted and implemented pursuant to § 275.204A-1 that is in effect, or at any time within the past five years was in effect; (ii) A record of any violation of the code of ethics, and of any action taken as a result of the violation”
• Access-person reports, names, approvals 204-2(a)(13)“A record of each report made by an access person as required by § 275.204A-1(b) … (ii) A record of the names of persons who are currently, or within the past five years were, access persons of the investment adviser”

More in the code of ethics guide.

Every firm.

The release: “The accuracy of disclosures made to investors, clients, and regulators, including account statements and advertisements”

• Brochures, supplements, Form CRS and delivery dates 204-2(a)(14)“A copy of each brochure, brochure supplement and Form CRS, and each amendment or revision to the brochure, brochure supplement and Form CRS”
• Written agreements with clients 204-2(a)(10)“All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such.”

Firms that tick: can move or hold client funds or securities.

The release: “Safeguarding of client assets from conversion or inappropriate use by advisory personnel”

• Check books, bank statements, reconciliations 204-2(a)(4)“All check books, bank statements, cancelled checks and cash reconciliations of the investment adviser.”
• Written communications on advice, funds and orders 204-2(a)(7)“Originals of all written communications received and copies of all written communications sent by such investment adviser relating to: (i) Any recommendation made or proposed to be made and any advice given or proposed to be given; (ii) Any receipt, disbursement or delivery of funds or securities; (iii) The placing or execution of any order to purchase or sell any security …”

Every firm.

The release: “The accurate creation of required records and their maintenance in a manner that secures them from unauthorized alteration or use and protects them from untimely destruction”

• Journals and cash receipts and disbursements 204-2(a)(1)“A journal or journals, including cash receipts and disbursements, records, and any other records of original entry forming the basis of entries in any ledger.”
• General and auxiliary ledgers 204-2(a)(2)“General and auxiliary ledgers (or other comparable records) reflecting asset, liability, reserve, capital, income and expense accounts.”
• Bills and statements 204-2(a)(5)“All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such.”
• Trial balances, financial statements, internal audit papers 204-2(a)(6)“All trial balances, financial statements, and internal audit working papers relating to the business of such investment adviser.”
• Written communications on advice, funds and orders 204-2(a)(7)“Originals of all written communications received and copies of all written communications sent by such investment adviser relating to: (i) Any recommendation made or proposed to be made and any advice given or proposed to be given; (ii) Any receipt, disbursement or delivery of funds or securities; (iii) The placing or execution of any order to purchase or sell any security …”

More in the off-channel communications guide.

Firms that tick: advertises: website, social media, testimonials or performance.

The release: “Marketing advisory services, including the use of solicitors”

• Copies of each advertisement 204-2(a)(11)“A copy of each … Advertisement (as defined in § 275.206(4)-1(e)(1) of this chapter) that the investment adviser disseminates, directly or indirectly”
• Testimonial and endorsement records 204-2(a)(15)“Documentation substantiating the adviser’s reasonable basis for believing that a testimonial or endorsement … complies with § 275.206(4)-1”
• Performance backup 204-2(a)(16)“All accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of any performance or rate of return …”
• Intended-audience records for hypothetical performance 204-2(a)(19)“A record of who the ‘intended audience’ is pursuant to § 275.206(4)-1(d)(6) and(e)(10)(ii)(B) of this chapter.”

More in the Marketing Rule guide.

Firms that tick: bills fees from the value of client assets.

The release: “Processes to value client holdings and assess fees based on those valuations”

• Written agreements with clients 204-2(a)(10)“All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such.”
• Bills and statements 204-2(a)(5)“All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such.”

Also: the firm’s billing files and the valuations behind them (no Rule 204-2 paragraph names it).

Every firm.

The release: “Safeguards for the privacy protection of client records and information”

• Regulation S-P policies, incidents and service-provider contracts 204-2(a)(25)“The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1); (ii) The written documentation of any detected unauthorized access to or use of customer information …”

More in the Regulation S-P guide.

Every firm.

The release: “Business continuity plans”

Also: the written plan and a dated note of the test (no Rule 204-2 paragraph names it).

Firms that tick: advises a government entity, or a pool one invests in.

Not in the release’s list. The planner adds it because Rule 204-2 names its records.

• Pay-to-play lists: covered associates, government clients, contributions 204-2(a)(18)“Books and records that pertain to § 275.206(4)-5 containing a list or other record of: (A) The names, titles and business and residence addresses of all covered associates of the investment adviser”