4c.  IA/PF - Regulatory Expectations for Compliance Testing, Surveillance, and Documentation (Intermediate)

We know that Rule 206(4)-7 requires advisers to adopt and implement policies and procedures reasonably designed to prevent violations of the Advisers Act, but how do we document effectiveness?  Effective monitoring and testing require careful planning, conscious implementation, and program adaptability. The test and its results are then detailed in writing, for example, in a report accompanied by supporting records, periodic documentation aggregated at year end, memos, or informal notes.   This lab will discuss regulatory expectations and use case studies, examples, and group discussions to:

• Draft an effective control framework for monitoring, testing, and surveillance.

• Learn what and when to test and identify who should help conduct the testing.

• Assess strengths and weaknesses of various testing methods and highlight testing opportunities for private fund managers (group A) and investment advisers (group B).

• Share best practices for capturing program outcomes (testing results, training, and mitigation efforts) in a written annual review report that is appropriate for sharing with regulators, senior management, and clients.