Risk Alert Following OCIE Examinations on Branch Offices

Today, OCIE released a Risk Alert focused on their recent observations from focused examinations of investment advisers that operate out of multiple locations or branch offices.

These examinations focused on whether the examined investment advisers had adopted and implemented reasonably designed written policies and procedures and implemented investment advice in an appropriate manner. As a summary, the staff reviewed firms’ main and branch office practices for:

(1) compliance with various rules under the Investment Advisers Act of 1940, including Rule 204A-1 and Rule 206(4)-2;

(2) the adherence by branch offices to comply with disclosures and agreements with clients relating to fees and expenses;

(3) the oversight of investment recommendations, and ensuring that those recommendations are suitable and consistent with disclosures to clients;

(4) management and disclosure of conflicts of interest; and

(5) allocation of investment opportunities.

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