Barbara Niederkofler Quoted in Hedge Fund Legal & Compliance Digest on OCIE Risk Alert
Barbara Niederkofler, an investment management partner at Akin Gump, has been quoted in the Hedge Fund Legal & Compliance Digest article “OCIE Risk Alert Highlights Most Common Compliance Deficiencies for Investment Advisers.” The article addresses problem areas identified in a risk alert from the Securities and Exchange Commission (SEC)’s Office of Compliance Inspections and Examinations (OCIE) and offers some advice.
Among the findings, according to the article, was that firms’ compliance manuals are often not reasonably tailored to an adviser’s specific business. Niederkofler said fund managers too often “will rely on a generic compliance policy or manual that meets the regulatory criteria under the Advisers Act but may not completely relate to their business practices.” She advised conducting an annual compliance review.
With regard to regulatory filings and common deficiencies on forms filed by private fund managers, Niederkofler said, “Managers need to understand the difference between regulatory assets under management and regular assets under management. Managers need to be sure that the back office or whoever is providing the information understands what RAUM is.”
The Code of Ethics Rule was another area noted in the risk alert, where the article says OCIE staff found several deficiencies. Niederkofler said she has seen violations similar to those outlined by OCIE and warned, “It’s one thing to have a code of ethics but it’s another thing to put it in practice and follow it. SEC examiners hone in very quickly on the difference between what’s on paper and what’s put in practice.”
Finally, there is the Books and Records Rule that requires managers to keep certain records that the SEC believes are important based on the adviser’s fiduciary obligations to its clients. According to Niederkofler, the biggest problems here are that the records “are inconsistent or managers are not careful about keeping track of things. There are a lot of programs managers can rely on so the entire burden does not fall onto the compliance officer to capture all of the information.” She added that it’s important to keep track “of all of the information you’re supposed to be collecting.”