Pre-Trade Compliance Software for Investment Advisors in Response to SEC Alerts

Risk alerts published by the SEC’s OCIE (Office of Compliance Inspections and Examinations) help protect investors, improve industry practices, and ensure market integrity. Within any given year, the OCIE can issue several alerts that affect an advisory firm’s daily processes and policies regarding compliance issues. 

Keeping up with trade compliance regulations can seem overwhelming, which is why many professional traders and advisors rely on the advanced functionality of trade compliance technology. We previously covered some of the dangers of ignoring changes in compliance regulations and the gift of pre-trade risk and compliance monitoring software, but can pre-trade compliance software for investment advisors help to heed SEC cautions?

Updating Compliance Rules to Heed Risk Alerts

In 2018, the SEC’s top risk alerts from the OCIE scrutinized failures to adequately disclose conflicts of interest, advisory fee and expense issues, and recordkeeping via electronic messaging. For the most part, the risks announced in these alerts should already be addressed in compliance programs, but the key takeaway from each alert involves updating compliance programs regularly to be sure. Examinations by the OCIE help to determine where the biggest compliance rule discrepancies exist for investors and advisors across the country and can be a good indicator of where your policy might fall short.

According to OCIE, compliance examinations in 2019 will have an emphasis on “digital assets, cybersecurity, and matters of importance to retail investors,” not surprisingly. In a risk alert published earlier this month, the OCIE flagged “investment advisors’ failure to adhere to requirements on disclosure and consent” as a top concern for compliance departments. The focus of compliance scrutiny commonly returns to some of the same issues but can lead to new regulations or warnings. This is why frequently updating compliance policies and procedures is a good way to heed SEC/OCIE risk alerts. 

Risk Avoided by Pre-Trade Compliance Software for Investment Advisors

Compliance departments should be responsible for reviewing practices that relate to risk alerts from the OCIE, and relevant compliance rules should be entered into pre-trade compliance software for investment advisors to easily check for violations. Checks by pre-trade compliance software not only allow advisors to avoid damage to a fund’s capabilities, but they also help to avoid the massive amounts of time and money that it takes to rectify compliance issues. 

Tracking and confirming every trade, checking purchase restrictions, fund substitutions, and other restrictions, and applying compliance controls are all aspects of risk management provided by pre-trade compliance software for investment advisors. Compliance technology is becoming increasingly smarter, more scalable, and fully transparent to compliance auditors. 

Compliance Risk is an Ongoing Issue for Investors and Advisors

Advisors should review their practices, policies, and procedures regularly to ensure compliance, but should also validate data with pre-trade compliance technology. With the ease of use of pre-trade compliance software for investment advisors, risk alerts based on examinations by the OCIE can be addressed and rules entered to monitor and avoid the highlighted risk. 

At Blaze Portfolio we are serious about mitigating risk.  We’ve automated the data validation process, so you can have confidence in the trade calculations. We also understand the importance of updating compliance checks regularly. Our robust pre-trade compliance features prevent incorrect trades, notify managers to review specific trades and keep a detailed record of everything done in the system in order to satisfy regulators. Please contact us to find out more about how Blaze Portfolio helps investment advisors via pre-trade compliance software, and how we can help you.

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