Compliance Solutions

Registered Investment Adviser Firms

Bates Compliance provide world‐class registered investment adviser Compliance and Regulatory consulting services and support for new and existing Registered Investment Adviser Firms. Our comprehensive set of services is tailored to the needs and requirements of each firm. Whether it is an acquisition of an existing adviser firm or an initial registration of a new firm, our dedicated and experienced professionals assist you at every step along the way.

Using our individual and team advising approach, our staff of senior compliance professionals, former CCOs and regulators, along with our roster of over 165 individual industry and subject matter experts, work with you to deliver tailored services and solutions to meet the current and ongoing compliance needs for a registered investment adviser firm, and to provide a cohesive, all-encompassing client experience. Learn why Bates Compliance is different.

Our Services for Registered Investment Adviser Firms

Advertising and Marketing Reviews

As your use of marketing material increases and your business grows, you can count on greater regulatory scrutiny. Being able to rely on an outside expert to provide oversight and guidance reduces your firm’s risks while still taking a holistic look at the materials from a business perspective as well. Bates Compliance’s professionals have the regulatory expertise, as well as, the business approach to provide insightful reviews of all types of marketing materials, including blog posts, presentation PowerPoints and client newsletters, as well as, general product and services advertising.

Annual Amendment and Regulatory Filings

All firms are required to file their AUA within 90 days of their fiscal year end, but, prior to filing, the firms must fund their IARD account for all state and representative renewal fees. 

Bates Compliance offers two services to assist firms with this filing. The first is our Annual Updating Amendment Filing, where a Bates Compliance consultant will work with your firm to review the items required for the update, organize the information and file it on your behalf. 

The second service, Annual Amendment and Review Service, also completes the Annual Updating Amendment filing, but will also review the firm’s client base to confirm the adviser is registered in all required states, and that the firm isn’t paying renewal fees in any state where it is below the state’s de minimis client exemption, as well as provide you with a copy of the firm’s renewal statement to confirm accurate and timely funding of your IARD account. 

Whatever your needs, Bates Compliance will work with you to ensure your firm’s Annual Updating Amending filing is complete and filed on time.

Annual Reviews – Rule 206(4)-7

All SEC-registered advisers, as well as those engaging in established best practices, are required to perform an annual review of the firm’s Compliance Program under Rule 206(4)-7. This is a review and testing of the firm’s Policies and Procedures and Compliance controls, culminating in a summary letter of the findings and remedial recommendations. Bates Compliance’s consultants have performed Annual Reviews for a wide range of clients, from small, one-member firms to some of the largest in the industry. Bates Compliance has extensive testing methodologies it uses to effectively “Pressure Test” a firm’s policies, determining if and where weaknesses exists and suggesting corrective measures the firm should implement. As supervision continues to top the SEC’s exam priority list, having a sound compliance program begins with having a sound compliance manual.

As-Needed Compliance and Regulatory Consulting

Bates Compliance works with advisers on an “As-Needed” basis to answer questions regarding compliance processes, updates to the firm’s compliance manuals, or to explain new regulations as they are adopted. When you engage with Bates Compliance, you are provided access to top regulatory experts, former CCO’s and former regulators, who will provide answers you can feel confident with.

Best Execution, Soft Dollar, Trade Allocation and Proxy Voting Compliance Reviews

Best Execution

As an investment adviser, your firm has a fiduciary duty to attempt to achieve best execution for your clients. This means RIAs must execute transactions for clients in a manner that the clients’ total costs or proceeds in each transaction are most favorable under the circumstances. While Bates Compliance recommends on-going reviews of executing broker-dealers, it is important to conduct a best execution and due diligence review of all broker-dealers at least on an annual basis when your firm directs client trades. This is especially true for those that use only one or two recommended broker-dealers and even when those are large, reputable broker-dealers.

In evaluating best execution, Bates Compliance will review the following:

  • Execution capabilities including the ability to handle trades and answer
  • Execution quality
  • Calls in a volatile market
  • Commission rates
  • Financial responsibility
  • Value of research or brokerage provided
  • Technology provided
  • Willingness, ability, facilities and infrastructure to work with RIAs
  • Administrative resources
  • Responsiveness
  • Pricing for services provided

It is also important to note that regulators have indicated that best execution is not determined by just the lowest possible commission costs but by the best qualitative execution. Therefore, it is necessary to conduct a qualitative review of broker-dealers used. Firms should systematically and periodically evaluate broker-dealers used, along with other broker-dealers to ensure that the firm’s recommended best execution services are optimal.

Bates Compliance can assist you in meeting these requirements and demonstrating how the review was completed.

Trade Allocation

The allocation of advisory transactions has and continues to be one of the biggest risk areas for advisory firms. This has especially been the case for advisers with performance based fees or proprietary account trading side by side with non-performance based fee accounts.

A strong and comprehensive trade allocation policy can go a long way towards mitigating your firm’s risk, by helping ensure that allocations are made in a fair and equitable manner for all clients. Full and accurate disclosure of these allocation policies and practices and the maintenance of adequate books and records are just as important, particularly as the SEC’s Enforcement Division has stepped up its efforts to mitigate cherry-picking in recent years.

Business Continuity and Succession Planning

Let Bates Compliance use its vast experience and knowledge of what similar firms are doing with regard to meeting firm-specific regulations relating to Business Continuity and Succession Planning. Much like the financial plans you create and manage for your clients, Bates can work with you to identify weaknesses in existing plans and suggest best practices to improve both the effectiveness and execution of those plans.

Compliance Manual and Code of Ethics Creation and Maintenance

Supervision is and continues to be atop the SEC Exam priorities year after year. A firm should use its policies, procedures, Compliance and Code of Ethics Manuals as the cornerstone of a robust and effective Compliance Program. Having comprehensive policies that are specific to the firm and its operations is vitally important. Many firms purchase generic, one-size fits all policy manuals that create more harm than good. Bates Compliance customizes its Compliance Manuals and Code of Ethics to fit the culture, business, operations and capabilities of your firm.

To have items listed in your manuals that don’t correspond to your firm is one of the findings in so many examinations. When you work with Bates Compliance, we take the time to understand your firm, how your firm operates and create a customized set of procedures that will both represent truly how your firm operates, but also guide your firm in how the process should be followed. Through a series of document reviews and extensive communication with the departments, your Bates Compliance consultant will be able to both capture as well as articulate the true processes of the firm. 

Compliance Outsourcing Services

Partner with Bates Compliance to ensure that your compliance program is running smoothly and operating efficiently. Whether you represent a single-member firm or an entire compliance department, partnering with Bates Compliance provides you with peace of mind that all the regulatory filings are up-to-date and that your compliance program will meet and exceed regulatory scrutiny.

We know that no two advisers are the same—that is why Bates Compliance creates a custom outsourcing program to meet your firm’s specific needs and never tries to fit you into a pre-determined “package.”

Bates Compliance Outsourcing services can include:

  • Prepare, amend, or renew your federal and state regulatory documents
  • Develop and/or maintain model code of ethics and insider trading policies
  • Review your website, advertising, and marketing materials
  • Review contracts
  • Review business practices
  • Conduct custody assessment services
  • Develop and offer updates to supervisory procedures
  • Perform a compliance audit
  • Perform a due diligence review
  • Act as your IARD account representative and file the annual amendment
  • Form ADV reviews and revisions
  • Mock SEC preparatory exams
  • SEC examination preparation and assistance
  • Conduct Rule 206(4)-7 annual reviews

If you are currently considering utilizing an outside compliance consultant, contact Bates Compliance first, and let us put together a customized compliance engagement specifically designed for your firm's needs. Discover the Bates Compliance Difference.

Guidance on Acquiring/Merging of Existing Advisory Firms

Bates Compliance can assist firms in performing due diligence reviews on existing firms, reviewing their compliance structure, books and records, as well as the regulatory history of the firm and its members, so you can feel confident when making the final decision to either acquire or merge firms. Whether it is one or many, Bates Compliance provides you with end-to-end assistance and solutions that will help you buy more revenue and less risk.

Independent Compliance Consultant Services

From time to time, firms may be required by regulators to hire an Independent Compliance Consultant to review and test policies and procedures, and to make recommendations to improve their compliance program or to perform annual reviews of the firm.

Bates Compliance offers Independent Compliance Consultant (“ICC”) services to help firms fulfill those requirements pursuant to SEC enforcement proceedings. Bates consultants and experts—many of whom are former regulators and CCOs—have good working relationships with the regulators and have been deemed “acceptable” to regulatory staff. Our team is familiar with regulator expectations and is experienced in developing, reviewing and testing policies, procedures, supervisory and compliance processes. We'll recommend changes and best practices to enhance compliance and supervisory systems where there are gaps, and work with firms to remediate the findings from regulatory matters, all in a manner which is conducive to your firms business and operations.

Internal Controls Review

Bates Compliance provides reviews of internal compliance processes. Our expert consultants will review your firm’s manuals, Form ADV, currently used advertising and marketing pieces, books and records as well as other core compliance items. This review is used to check the soundness of the firm’s compliance program and identify any areas of concern. A report of the findings as well as recommended corrective actions will be provided.

Mock SEC Review/SEC Preparatory Review

The process of a mock review is very similar to the experience you can expect to have during a regulatory examination. Bates Compliance will request specific documents prior to the onsite portion of the engagement. Once the team is on site, either announced or not, they will work with the senior leadership and the Compliance Department in the same manner as the regulators would. They will request specific items of the Compliance Department, including documents, manuals, client accounts and review items and make notations.

No suggestions are made during a mock review, which is usually requested by the board or management to test how their Compliance Department (including the CCO) would handle an actual review conducted by the regulators. Part of the process is seeing how Firm personnel would fare in their ability to provide the requested documents and their ability to respond to other requests and questioning. During the review, Bates Compliance’s team will conduct mock interviews with key personnel to prepare you for interviews with the regulators. During these reviews, our team of professionals will step in and out of the role of a regulator and coach senior management on how to answer lines of questioning and be better prepared for the interview process. Although we will also be reviewing the Firm’s compliance program, we are as interested in how the department handles the review.

Registration Lifecycle Service

Registration and Ongoing Compliance Support, Compliance Program Design, Review and Implementation

 

Bates Compliance’s Registration Lifecycle Service provides new advisers with peace of mind, helping you meet your regulatory requirements from day one. Bates Compliance takes a holistic approach to the registration process by first working with your firm to design, create and implement the firm’s compliance program prior to completing your registration. The SEC (as well as state regulators) will expect that, upon approval, your firm is meeting all the regulatory requirements from that point forward.

Bates Compliance will work closely with your firm to design a compliance program tailored to meet your firm’s specific compliance needs with items such as:
  • Customized Policies and Procedures Manual
  • Customized Code of Ethics Manual
  • Firm-specific Privacy Policy
  • Firm-specific Disaster Recovery Plan 
Your consultant will then work with you to review the services your firm will be providing and to prepare to register your firm with the designated regulatory body:
  • Registration with the SEC or the state of domicile
  • Preparation and filing of Form ADV Part 1 and drafting the ADV Part 2 brochure
  • Registration of principals, officers and advisory reps, as needed (up to 4)
  • Review of advisory contracts
Once the firm is approved, your consultant will then be available to assist you throughout the balance of the engagement to:
  • Prepare, amend, or renew your federal and state regulatory documents
  • Develop and maintain new and existing policies, as needed
  • Review your website, advertising and marketing materials, as needed
  • Review business practices
  • Conduct custody assessments
  • Develop and offer updates to supervisory procedures
  • Perform due diligence reviews of third party vendors
  • Act as your IARD account administrator and file the annual amendment
  • Review and amend Form ADV, as needed
  • Conduct Rule 206(4)-7 annual review
  • Provide ongoing compliance support on an as-needed basis
  • Create and Review Your Disaster Recovery Plan

Bates Compliance is able to provide your firm with comprehensive compliance support or stand-alone registration and project services. 

Risk Assessment/Gap Analysis

Regulators expect all SEC-registered advisers to conduct a Risk Assessment/Gap Analysis of their firm, and to review and update it annually. Bates Compliance has the expertise and the methodology in place to review the inner workings of your firm and compare it to industry best practices. We assist your firm in prioritizing the highest-risk areas as well as determining where gaps exist and recommending the necessary change to address them. At the conclusion of the review, you will receive a matrix comparing the firm’s activities, rating them in comparison to industry standards and providing the firm with recommendations on enhancements to your Compliance Program, as well as a risk-based recommendation on what enhancements the firm should focus on first.

SEC Regulation Best Interest and Form CRS

Bates Reg BI and Form CRS compliance consultants can help your firm handle the rquirements of SEC Regulation Best Interest.

We help you navigate:

  • Disclosure obligations
  • Duty of care obligations
  • Conflicts of interest obligations
  • Additional compliance obligations

Bates also offers Reg BI and Form CRS webinars and CLE. Learn more on the Reg BI Service Page.

State-to-SEC Transition Filing

Bates Compliance assists firms transitioning to SEC registration once an adviser meets the SEC requirements. Usually this will be when the firm exceeds $100MM in AUM ($30MM if in New York or Wyoming) within 90 days of their Annual Amendment Filing. 

Each year, advisers are required to file an Annual Amendment Filing with the SEC or State of domicile that must be completed within 90 days of the firm’s Fiscal Year End (FYE). Most firms’ fiscal year ends on December 31st, so the filing must be completed annually by March 31st, but their FYE can be any date the firm determines at the time of registration. If the firm’s FYE is any date other than December 31st, the firm has 90 days from that date to complete its Annual Amendment Filing. 

Once the Annual Amendment has been filed and it is disclosed that the firm has exceed the $100MM AUM threshold, they have 90 days from that filing to complete their transition filing. Bates Compliance can assist the firm with these filings.

Some advisers will want to transition as soon as they exceed the $100MM AUM mark, but this is not always advisable. The issue may arise where their AUM suddenly falls below the $90MM AUM due to unforeseen market conditions, which would require them to transition back to their state of domicile if their AUM at FYE had stayed below the $90MM AUM threshold.

The process for transitioning from state to federal registration includes new disclosure language within the Form ADV Brochure document. It also requires that they withdraw from their state of domicile and register with the SEC. The process happens concurrently, so there is no downtime at all. It is always recommended that, while the transition filing is being completed, the firm have the balance of their Form ADV Brochure reviewed for accuracy. This is because normally, after the transition, the SEC will schedule an onsite exam of the adviser within one year. This is also a good time to talk to your Bates Compliance consultant about the additional requirements your newly registered SEC adviser firm will be required to meet. Some requirements, such as having a Compliance Manual that meets SEC expectations, a Code of Ethics Manual, a designated CCO and an Annual Review of your Policies and Procedures under Rule 206(4)-7, are all services that Bates Compliance can assist you with.

Keeping investment advisers up‐to‐date on Rules and Regulations is a crucial part of maintaining a robust compliance culture. Bates Compliance and Regulatory Alerts and Updates provide firms with keen insights on what is changing and what they can do to stay compliant.

Discover the Difference

Succeed with comprehensive registered investment adviser firm compliance and regulatory consulting and services from the industry-leading experts at Bates Compliance.

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