D.E. Scott Investment Management Compliance ServicesD.E. Scott Investment Management Compliance Services

Policy & Procedure Development

We offer a complete array of compliance policy and procedure evaluation and development options, from targeted procedure development to complete diagnostic evaluations and updates of all compliance policies and procedures.

Rule 206(4)-7 of the Advisers Act requires each registered investment adviser to develop policies and procedures designed to prevent compliance violations, detect violations that have occurred, and correct identified violations. At a minimum, the SEC expects each adviser to consider the following elements:

  • 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;
  • Proxy voting policies and procedures, including circumstances under which the adviser manages material conflicts of interest;
  • 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;
  • Code of Ethics, which should address, among other things, the proprietary trading of the adviser and personal trading activities of supervised persons;
  • The accuracy of disclosures made to investors, clients, and regulators, including those provided in account statements and advertisements;
  • Safeguarding of client assets from conversion or inappropriate use by advisory personnel;
  • 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;
  • Marketing advisory services, including the use of solicitors;
  • Processes to value client holdings and assess fees based on those valuations;
  • Safeguards for the privacy protection of client records and information; and
  • Business continuity plans.

We work with our clients to ensure that their policies and procedures incorporate the requirements of the Advisers Act. Equally important, however, is that we work with our clients to ensure that policies and procedures are designed to be practical and reflect each client’s actual operating practices.