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As 2020 finally comes to a close, compliance officers face the unenviable job of performing their compliance program’s annual review under Advisers Act Rule 206(4)-7). An essential element of that review is updating the firm’s compliance policies and procedures to reflect relevant changes to regulations and regulatory guidance. Here’s a cheat sheet for Chief Compliance Officers summarizing the SEC’s big-ticket items from 2020.
Despite the massive disruption caused by the COVID-19 pandemic, the SEC didn’t skip a beat, moving ahead with examinations, enforcement actions, and regulatory initiatives in 2020. The SEC’s Division of Examinations (the Division, formerly known as Office of Compliance Inspections and Examinations, or OCIE), shifted to remote examinations and focused on threats posed by COVID-19, such as fraud, insider trading, and inadequate disclosure. Although some deadlines and requirements were extended because of state-imposed lockdowns, the SEC gave investment advisers little slack, expecting prompt compliance with Form CRS implementation and most regulatory deadlines. The SEC also expanded its routine examinations to ask about investment advisers’ ability to serve clients and effectively supervise their staff during state-imposed lockdowns. Public messaging from the Staff included an intense focus on how financial firms and the public can guard against increasing threats from cyber criminals taking advantage of the chaos caused by the pandemic.