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Memorandum

Memorandum: OCIE Multi-Branch Adviser Initiative Risk Alert

January 18, 2017

The SEC's Office of Compliance Inspections and Examinations ("OCIE") issued a Risk Alert regarding the launch of its Multi-Branch Adviser Initiative (the "Initiative").  In recent years, the OCIE staff (the "Staff") has observed an apparent increase in investment advisers with multiple branch offices and operations located outside of the adviser's principal or main office.  The Initiative will examine whether such advisers are in compliance with the federal securities laws given the additional and unique risks of a multi-office operating structure.  

Specifically, the Staff will focus on advisers' compliance programs, including their implementation of policies and procedures in the main and branch offices, supervisory structure, role and empowerment of compliance personnel who oversee branch offices and accuracy of information regarding branch offices in regulatory filings.  Depending on an adviser's particular business activities, the Staff may assess additional risk areas, including fees and expenses, advertising, implementation of the code of ethics and compliance with the Custody Rule.   

Under the Initiative, the Staff will also inspect advisers' oversight of advisory services, including the process by which investment advice is provided to clients by branch office personnel, and policies and procedures relating to the provision of advisory services, such as identification of potential conflicts of interest and the level of autonomy of supervised persons in providing advice. In addition, the Staff may examine the supervision and review of investment recommendations made to clients within and across the branch offices and the allocation of investment opportunities among client accounts.

Advisers with multiple branch offices should consider what additional practices, policies and procedures may be necessary to address the focus areas identified in the Risk Alert.

 

______________________________________________________ 

 

If you have any questions regarding the matters covered in this memo, please contact any of the partners and counsel listed below or your primary attorney in Seward & Kissel's Investment Management Group.

 

 

John J. Cleary

cleary@sewkis.com 

(212) 574-1255

Maureen R. Hurley

hurley@sewkis.com 

(212) 574-1384

Paul M. Miller

millerp@sewkis.com 

(202) 661-7155

Joseph M. Morrissey

morrissey@sewkis.com 

(212) 574-1245

David R. Mulle

mulle@sewkis.com 

(212) 574-1452

Steven B. Nadel

nadel@sewkis.com 

(212) 574-1231

Anthony C.J. Nuland

nuland@sewkis.com 

(202) 661-7140

Marlon Q. Paz
paz@sewkis.com

(202) 661-7178

Patricia A. Poglinco

poglinco@sewkis.com 

(212) 574-1247

Christopher C. Riccardi

riccardi@sewkis.com 

(212) 574-1535

Jack Rigney

rigney@sewkis.com 

(212) 574-1254

John E. Tavss

tavss@sewkis.com 

(212) 574-1261

Robert B. Van Grover

vangrover@sewkis.com 

(212) 574-1205

Robert L. Chender

chender@sewkis.com

(212) 574-1415

Ivy Wafford Duke

duke@sewkis.com 

(202) 661-7179

Keri E. Riemer

riemer@sewkis.com 

(212) 574-1598

David Tang

tang@sewkis.com 

(212) 574-1260

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About Seward & Kissel LLP

Seward & Kissel LLP, founded in 1890, is a leading U.S. law firm with an international reputation for excellence. We have offices in New York City and Washington, D.C.

Our practice primarily focuses on corporate, litigation and restructuring/bankruptcy work for clients seeking legal expertise in the financial services, corporate finance and capital markets areas.  The Firm is particularly well known for its representation of major commercial banks, investment banking firms, investment advisers and related investment funds (including mutual funds and hedge funds), master servicers, servicers, investors, distressed trade brokers, liquidity providers, hedge fund administrators,  broker-dealers, institutional investors and transportation companies (particularly in the shipping area). 

Notices

 

This memo  may be considered attorney marketing and/or advertising. Prior results do not guarantee a similar outcome.  The information contained in this memo is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter.  As such, recipients of this memo, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this memo without seeking appropriate legal or other professional advice.  This information is presented without any warranty or representation as to its accuracy or completeness, or whether it reflects the most current legal developments.