Five minutes to comply

REVIEWING
Studying conflict of interest policy and procedures

COMMUNICATING
Briefing responsible individuals sufficiently on the conflicts protocol

FLAGGING
Alerting staff to inherent conflicts in the business model

LOOKING AHEAD
Anticipating conflicts arising in new product lines

MAKING CHANGES
Updating protocol in line with recent enforcement actions if necessary

Action items

Julie Riewe, former co-chief, asset management unit, division of enforcement at the SEC, provided clarity on the subject in a 2015 speech

1.Conflicts of interest are material facts that investment advisors, as fiduciaries, must disclose to their clients

2. The law on conflicts of interest requires all conflicts to be disclosed, including potential conflicts

3. Non-disclosure of a conflict cannot be excused in
‘good faith’

4. Eliminating a conflict prior to making investors aware of it does not excuse non-disclosure of a conflict

5. Once a conflict of interest is identified, it can be mitigated by disclosure or elimination

Ace your compliance

Take an objective evaluation of your firm, personnel and business structures to assess where conflicts could arise

Know which threshold of mitigation to apply to a conflict – elimination or disclosure with some mitigation

Ensure the personnel assigned to deal with conflicts of interest is sufficiently objective

Review all relevant documents to make them consistent in the disclosure of conflicts of interest, including: Forms ADV, private placement memoranda, limited partnership agreements, client agreements and prospectuses

Know when verbal, written or both types of disclosure are necessary