[Photo: ComplianceBuilding.com]

The SEC has a launched a multi-branch advisor initiative targeting the “unique risks and challenges” for advisors operating through branch offices geographically separate from their principal place of business.

Challenges in the branch office model specifically include designing and implementing compliance programs, as well as supervising people and processes in branch offices, the SEC’s Office of Compliance Inspections and Examinations (OCIE) states in its December 12th Risk Alert. 

OCIE’s “Multi-Branch Adviser Initiative”.    The focus will be on compliance supervision, the role and empowerment of compliance personnel, and how policies and procedures are implemented. OCIE staff will also review:  (i) investment recommendation oversight;  (ii) conflicts of interest;  (iii) allocation of investment opportunities;  and, (iv) how multi-branch firms oversee and supervise branch office activities.

Cipperman Compliance Services said that the SEC “is catching up” with FINRA in launching such exams. As to assessing advisors' compliance programs, OCIE states that through interviews and the review of advisory records, the examiners will assess, among other things:

• Implementation of policies and procedures in the main and branch offices;
• Supervision structure, including an assessment of how such supervision is tailored to the unique risks in particular branches;
• Role and empowerment of compliance personnel charged with overseeing branch offices, including their level of access to documents and relevant information; and
• Accuracy of information on the advisor’s filings regarding branch offices, including Form ADV, as compared to actual practices.