Regulatory compliance attorneys agree: Proper documentation of compliance procedures can optimize the process of compliance. If you detail your compliance procedures well in a company manual, the auditor may take that as an indication of compliance. SEC Rule 206(4)-7 and 17 CFR Parts 270 and 275 require a written compliance manual anyway, so make it as detailed as you possibly can. Below are topics that you must address within your manual, at a minimum, to the extent they are relevant to your business:

Portfolio management processes

  • The government wants to know that your company is moving money legally.
  • The accuracy of disclosures made to investors, clients and regulators.
  • It is a broker’s fiduciary duty to accurately and timely disclose information to all parties.

Proprietary trading

If your company has proprietary trading schemes, the SEC wants to ensure that they are not misrepresented as a form of investment that bumps up against industry regulations or misrepresents itself in name or function.

Safeguarding of client assets

There are certain risks to investing. One of those risks is not the unexpected disappearance of assets for no good reason. The SEC wants to know how you protect the value of assets once they are entrusted to you from clients.

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
There are certain kinds of records that must be associated with every action taken within a financial services company. These records must be properly input, stored and maintained. They must also be properly applied to the correct account. Your manual should note how your company keeps these records free of error and unauthorized alteration.

Safeguards for the privacy protection of client records and information
Financial records are some of the most personal records that an individual or a company can generate. The financial services industry takes on certain responsibilities when it takes possession of these assets on behalf of clients. Part of the reason the SEC exists is to protect the relationship between investors, middlemen and property.

Trading practices
Document your trading practices to ensure that your company is representing itself correctly to its clients.

A financial services company must market itself in an ethical way, ensuring that clients who invest know exactly what their risks are and who will be handling the money.

Processes to value client holdings and assess fees based on those valuations
There is a limit to the number of fees and the size of fees that a financial services company may charge for handling assets. Fees that are contingent upon asset valuations are especially important to regulate, especially in the case of fluctuating value.

Business continuity plans
The government wants to know how your business will continue to remain in compliance in the future. The SEC expects that your company will be able to keep up with ongoing compliance measures that may change at unexpected times.

Treeno specializes in document management for financial advisors. Although you must create your own manuals, Treeno can assist you in managing and securing your client files. Treeno also documents when the original files were scanned and keeps the files in their pristine and unaltered state. The audit table will track access to file and versioning of any file. Give us a call or send an email to discuss how the right digital document management solution can help you today.