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SEC Rule 206(4)-7

Requires investment advisers to adopt and implement policies and procedures reasonably designed to prevent violation of federal securities laws, to annually review their adequacy and effectiveness and designate a CCO responsible for them.

Rule Overview

Jurisdiction: United States

Regulator: SEC

Topic: General Requirements

Overview
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In connection with the supervisory compliance controls of Rule 206(4)-7, SEC Final Rule Release IA-2204 and corresponding SEC guidance, firms must:

  • implement internal compliance controls designed to detect and prevent regulatory violations;
  • establish supervisory policies and procedures for all business-related communications with clients, including:
    • methods of detecting and addressing regulatory violations in electronic communications, and
    • restricting such communications if they cannot be adequately archived and supervised;
  • implement safeguards to protect the privacy of client records and information;
  •  monitor the accuracy of disclosures made to investors, clients and regulators, including account statements and advertisements;
  • implement controls for the accurate creation and maintenance of required records in a manner that secures them from unauthorized alteration or use and protects them from untimely destruction;
  • annually review written supervisory policies and procedures
  • designate a chief compliance officer to administer the supervisory compliance systems; and
  • implement an annual review system and ensure the ability to store review results.

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