RIA Compliance BlogThe SEC Division of Examinations recently issued a Risk Alert detailing examination observations regarding SEC-registered investment advisers’ (“advisers”) compliance with the annual review requirements under Rule 206(4)-7 of the Investment Advisers Act of 1940 (“Compliance Rule”). The Risk Alert serves as a reminder that an annual compliance review is more than a check-the-box exercise. Advisers should conduct a meaningful review of their compliance program, document the results, and address any deficiencies identified.
Articles Posted in Compliance
SEC Highlights Effective Compliance Controls for RIAs
The Securities and Exchange Commission (“SEC”) settled an administrative proceeding against Simplify Asset Management, Inc. (“Simplify”), a Delaware corporation and registered investment adviser that engages in transactions related to exchange-traded funds (“ETFs”), for multiple violations of the Investment Company Act of 1940 (the “Investment Company Act”). From July 2021 through November 2024, Simplify caused its ETF clients to violate multiple provisions of the Investment Company Act by failing to maintain and implement adequate compliance policies and procedures and by failing to adequately oversee certain regulatory requirements. The SEC has imposed a cease-and-desist order and a $400,000 civil money penalty, which Simplify must pay within 21 days of entry of the order.
SEC Enforces Timely SAR Filing Requirements
Highlighting the importance of timely filing of Suspicious Activity Reports (“SARs”), the Securities and Exchange Commission (“SEC”) entered a settled order against UBS Financial Services Inc. (“UBSFS”), a registered broker-dealer and investment adviser incorporated in Delaware and with its principal place of business in Weehawken, New Jersey. The SEC found that UBSFS failed to timely file certain SARs, in violation of Section 17(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 17a-8 thereunder. As part of the settlement, UBSFS agreed to cease and desist from committing or causing further violations of the relevant provisions, was censured, and agreed to pay a $20 million civil monetary penalty to the SEC within 30 days of entry of the order.
SEC Proposes Update to E-Delivery Rules and Framework
The Securities and Exchange Commission recently proposed a new rule, Regulation E-Delivery, that looks to broaden the ability of financial industry professionals to deliver required compliance and regulatory information and documents to clients and proposed clients. If adopted, the proposed rule would modernize the regulatory framework by superseding the SEC’s current guidance for e-delivery while providing new requirements and conditions for electronic delivery. Continue reading ›
SEC Risk Alert Highlights Economic Conflicts of Interest: What RIAs Need to Know
The SEC Division of Examinations issued a Risk Alert earlier this month detailing examination observations related to investment adviser economic conflicts of interest. The alert serves as a reminder that the SEC continues to prioritize the review of compensation arrangements, revenue-sharing programs, fee practices, and disclosure obligations during adviser examinations.
For registered investment advisers (RIAs), the message is clear: firms should review their disclosures, billing practices, and compliance programs to ensure they adequately address conflicts that could influence recommendations made to clients. Continue reading ›
SEC Raises Threshold for Qualified Clients
The SEC recently announced its intent to issue an order that will adjust the dollar amount necessary to be considered a “qualified client” under Section 205(a)(1) of the Investment Advisers Act of 1940 (“Advisers Act”). This increase, adjusted to reflect inflation, raises the minimum net worth or dollar amount of assets under management necessary for an investment adviser to charge a performance fee to the client.
SEC Issues Risk Alert Regarding Third-Party Ratings
On December 16, 2025, the SEC Division of Examinations released a Risk Alert containing observations regarding investment advisers’ compliance with Rule 206(4)-1 (the “Marketing Rule”). The Division provides risk alerts to inform and remind investment advisers and their stakeholders of advisers’ compliance requirements. Regarding third-party ratings in investment advisers’ advertisements, the Division noted that it has observed common deficiencies regarding compliance with the requirements relating to due diligence and disclosures.
The Marketing Rule prohibits the use of third-party ratings in advertisements unless the adviser has a reasonable basis for believing that any questionnaire or survey used in the preparation of the third-party ratings meet certain criteria, and that either the rating or the adviser discloses certain information related to the ratings. Continue reading ›
SEC Releases Risk Alert Regarding Investment Adviser Testimonials
On December 16th, the SEC released a Risk Alert containing observations of investment advisers’ compliance with Rule 206(4)-1 (the “Marketing Rule”). The Commission provides risk alerts such as this to inform and remind investment advisers and stakeholders of advisers’ compliance requirements. Regarding testimonials and endorsements, the Commission observed common deficiencies in the following requirements: (1) clear and prominent disclosures, (2) disclosure of material terms of compensation arrangements, (3) disclosure of material conflicts, (4) oversight and compliance, (5) ineligible persons, and (6) promoter affiliated with the adviser. Continue reading ›
SEC Division of Examinations Announces 2026 Exam Priorities
On November 18, 2025, the SEC Division of Examinations announced its 2026 examination priorities. Each year, the Division releases its annual examination priorities to (1) inform investment advisers, broker-dealers, and investors of the Division’s upcoming points of emphasis and (2) provide a roadmap for firms to effectively direct their compliance attention.
Regarding investment advisers, the Division’s examination priorities are:
FINRA Cracks Down on Form CRS Deficiencies
In a recent enforcement action that is significant to broker-dealers and investment advisers alike, FINRA continues to emphasize the importance of making full and accurate disclosures in customer relationship summaries (Forms CRS) and of following the Form’s instructions.
Last month, FINRA settled a case with J.K. Financial regarding Form CRS disclosures. The California based, SEC-registered broker-dealer agreed to FINRA’s settlement without admitting or denying its allegations.
Also known to investment advisers as Form ADV Part 3, Form CRS is a brief introduction to the broker-dealer or investment adviser, providing retail clients with highlights and conversation starters regarding the adviser. A key conversation starter is Item 4’s “Do you or your financial professionals have legal or disciplinary history?” Form CRS’s instructions require advisers to respond “Yes” if the firm or any of its financial professionals are required to disclose disciplinary history on any regulatory disclosure forms. Continue reading ›