What kind of policies and procedures do I need to have in place as a newly registered investment advisor?
• a. This is most importantly determined by the characteristics of the firm. The policies and procedures must be drafted for the specific firm. Off-the-shelf manuals that are not tailored to the needs of a particular firm will not be acceptable. • b. Next, the jurisdiction of registration must be considered. Rule 206(4)-7 of the Investment Advisers Act of 1940, as amended, requires all SEC-registered investment advisors to adopt and implement written policies and procedures reasonably designed to prevent the violation of the Investment Advisers Act of 1940. Certain states have regulations in place regarding certain policy requirements, while other states have none. At a minimum, an investment advisor should have policies and procedures in place to help ensure that the fiduciary duty to clients is met. Basic policies and procedures include best execution, insider trading and personal securities transaction, privacy and a business continuity plan.
