The SEC Division of Examinations identified common compliance deficiencies found during examinations of municipal advisors.
In a Risk Alert, SEC staff listed deficiencies related to registration, recordkeeping, supervision and disclosures. Highlighted areas included:
- Registration: Incomplete, inaccurate filings; failure to amend promptly; failure to pay fees;
- Recordkeeping: Failure to keep electronic communications, including emails sent from personal email addresses and text messages; poor financial records; failure to certify compliance as required under MSRB Rule G-44 (“Supervisory and Compliance Obligations of Municipal Advisors”); failure to keep written agreements;
- Supervision: Failure to have adequate written supervisory procedures; failure to conduct annual reviews of compliance; and
- Disclosures: Inadequate disclosure of conflicts; poor documentation of advisory relationships.
SEC staff said the deficiencies in the report were similar to those identified in its 2017 Risk Alert, a reminder that those areas continue to be the most vulnerable (see previous coverage).
The SEC staff encouraged municipal advisors to review the deficiencies identified in the alert and consider implementing programs to improve compliance.
Fried Frank Harris Shriver & Jacobson LLP
August 23 2022