Compliance Program

All Registered Investment Advisers (“RIA”) are required to have a compliance program that addresses certain regulatory requirements; written policies and procedures, designated chief compliance officer, annual program review, as well as other elements. The effective administration of a RIAs compliance program is challenging.

Bates Compliance’s Annual Compliance Program Support provides the following core services:

• Annual Updating Amendment of Form ADV
• Rule 206(4)-7 | Annual Program Review
• Regulatory updates to applicable compliance policies and procedures
• Annual compliance meeting
• Compliance program calendar
• Block of general consulting hours

Bates also provides additional tailored services to be added to the core services depending on a RIAs needs, such as:

• Assessment, development, and implementation of policies and procedures for new regulatory rules
• Regulatory filing assistance (Form U4, U5, 13F, and PF)
• Policy and procedure drafting and editing
• Document consistency review – marketing > agreements > policy and procedures > disclosures
• Periodic CCO or compliance department support meetings

This service assists the RIA with the administration of their compliance program. The core annual support services are designed to help address the main elements of a compliance program. It does not include the performance or testing of any specific compliance policy or procedure tasks. Clients have the option of adding in those activities which would be identified and scoped separately as a service.

Registered Investment Advisers (“RIA”) may desire a third party or an Independent Compliance Consultant (ICC) to help remediate a compliance violation or program deficiency. These reviews may be the result of an internal audit finding, in anticipation of a regulatory action, or in response to a regulatory proceeding. Due to the nature of an independent compliance consultant review, they may be performed through a firm’s outside counsel and/or as prescribed by a regulator. 

Many Bates consultants and experts are former regulators and are very familiar with regulator expectations.

Bates will, depending on the specifics of the circumstance or regulatory order, conduct this review consisting of the following stages:

• Introduction and Initial Review of the Violation
• Request and Analysis of Related Documentation
• Interviews with Relevant Parties
• Drafting of Report
• Delivery of Report and Remediation Recommendations

This service is generally in response to a specific program weakness, deficiency, or violation. For ICC’s involving regulatory orders, they typically include an initial review with a follow up review a year later. An ICC performed under a regulatory order results in a review report with remediation recommendations that is provided to both the RIA and the regulator. For non-regulatory ICC’s, the review and report is typically coordinated through the firm’s outside counsel.

Bates may involve other practice areas (such as our Data Analyses and Analytics) as well as our Bates subject matter expert affiliates to provide particular experience to the review service.

All Registered Investment Advisers (“RIAs”) are subject to examination by their regulatory authority (state securities division and/or the SEC). This Mock Regulatory Exam service provides firms the opportunity to experience a dry run of the examination experience. The examination follows a routine regulatory exam process with periodic evaluation points to help RIAs assess their preparedness.

Bates Compliance will, generally, conduct this mock exam under the following stages:

• Introduction and Initial Firm Interview (presentation)
• Evaluation of Firm Interview
• Mock Exam Document Request
• Evaluation of Firm’s Document Production
• Personnel Interviews (examine like interviews of select RIA personnel)
• Evaluation of Personnel Interviews
• Exit Interview and Summary of Preparation Recommendations

This is a preparatory service for RIAs wanting to test their readiness for a regulatory examination. Clients have the option of adding on an analysis of business activities or the adequacy or testing of policies, procedures, or practices contracted as separate services.

Broker-Dealers (“BDs”) must conduct a review of its Office of Supervisory Jurisdictions (“OSJs”) and non-OSJ branches that supervise non-branch locations at least annually. All non-supervising branch offices must be inspected at least every three years. All non-branch offices must be inspected periodically depending on the nature and complexity of the branch’s business, volume of business, and number of associated persons assigned to the branch.

Bates branch inspections includes verification of policies and procedures related but not limited to:

• Safeguarding of customer funds and securities
• Maintaining required books and records
• Supervision of supervisory personnel
• Transmittal of funds or securities
• Changes in customer information
• Transaction review and reporting
• Sales practices
• Advertising and other communications
• Client complaints
• Cybersecurity

An inspection report will be produced that summarizes the findings and provides recommendations, if applicable. If a firm is utilizing an audit platform (e.g., RegEd AuditTrax), Bates will use the firm platform.

Bates Compliance may involve other practice areas as well as our subject matter expert affiliates to provide particular experience to this service.

Compliance programs will at times need resource assistance or added expertise. Whether it is a change in compliance program personnel, changes in the business, or application of regulatory requirements, your program may need temporary assistance.

Bates provides “As-Needed” compliance program support on a project or hourly basis for various program needs such as, but not limited to:

• Providing interim support for vacant compliance department positions
• Creating, updating, or reviewing compliance program related documentation:
  • Compliance policies and procedures
  • Code of ethics
  • Written Supervisory Procedures ("WSPs")
  • Business continuity and disaster recovery plans (“BCP”)
  • Information security plans
  • Regulatory disclosure documents
  • FINRA applications and reports
  • Anti-Money Laundering Program
  • Client notices and applications
• Performing marketing and advertising reviews
• Performing other tailored supervisory procedure reviews and testing
• Developing and delivering compliance related training
• Supporting vendor due diligence activities
• FINRA, SEC, or State examination support

This is a temporary service to support a periodic need for assistance with compliance program administration. Each service includes a statement of work and is engaged as a project with an estimated beginning and end date. Bates consultants and our subject matter expert affiliates can provide experience in the many areas of regulatory compliance.

For traditional financial institutions and most Money Services Businesses (MSBs), compliance with the anti-money laundering (AML) requirements under the Bank Secrecy Act (BSA) is an unavoidable component of conducting your operations. All financial institutions and any business conducting financial transactions are required to meet the Office of Foreign Assets Control (OFAC) compliance obligations. It is essential to have a well-developed BSA/AML/OFAC compliance program in place that manages compliance risks and promotes best practices for your industry.

Learn More