SEC Hosts Virtual Compliance Outreach Seminar

On November 7, the Securities and Exchange Commission (SEC) held a virtual Compliance Outreach Seminar for investment companies and investment advisers. The seminar was intended to help CCOs and other fund and adviser personnel learn about hot topics in the investment management industry and understand how to improve their compliance programs. The seminar covered topics including information security, registered funds, private funds, marketing, registered advisers and hot topics. Much of the discussion focused on items pulled from recent headlines and regulatory focus areas, including off-channel communications enforcement actions, cybersecurity, vendor oversight, private credit, share-class selection and conflicts of interest.

During the registered fund discussion, the SEC staff emphasized the importance of clear and accurate disclosure to describe principal investment strategies and risks across all fund filings. In the context of private credit funds, the panelists noted that advisers should be able to clearly identify how they conduct due diligence. Panelists discussed the SEC’s continued focus on fund service providers, fee review and disclosure, and derivative and liquidity risk management programs. In addition, the SEC staff also highlighted the SEC’s focus on board oversight of fund compliance programs and board meeting minutes.

On Artificial Intelligence, the Division of Examinations reported that AI has been rapidly implemented across the investment management industry. The SEC staff noted the SEC’s intention to have continued focus on artificial intelligence in regulatory examinations, and that firms should focus on the development of written compliance procedures to reflect systems controls, accurate and non-boilerplate disclosures regarding the use of AI, and the implementation of a documented due diligence process in place, including with respect to third-party systems that use artificial intelligence. The SEC staff noted that the SEC is technology-neutral but expects firms to stay current with emerging developments and requirements relating to artificial intelligence.

Click here to view the Compliance Outreach Seminar agenda.


***Please note, the MFDF blog will pause during the week of Thanksgiving and resume on Monday, December 2***