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Modern Compliance: Best Practices for Securities & Finance, Volume 2 by Jason K. Mitchell ,David H. Lui ,John H. Walsh

Modern Compliance: Best Practices for Securities & Finance, Volume 2

Edited by John H. Walsh, David H. Lui, Jason K. Mitchell


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In a world of ever-increasing complexity, Modern Compliance Volume 2 expands and cements the original volume’s place as the industry standard for the hard facts and soft skills of compliance best practices.  Like the original volume, it is written to help the reader understand the internal control structures and ethical considerations necessary to navigate one of the most challenging roles in American business today:  Chief Compliance Officer at a financial services firm.  Volume 2 brings together the scholarship of 30 of the best known professionals in the compliance arena, each of whom is a well-recognized leader in his or her area of practice, and expands the in-depth coverage and discussion of the many subjects critical to the success, even the professional survival, of the CCO.


Pages 800
Publish Date 10/01/2017
Product Line Wolters Kluwer Legal & Regulatory U.S.
ISBN 9780808048220
SKU 10038739-0002
Table of Contents

CHAPTER 1: Introduction - By Lisa Crossley

CHAPTER 2: A History of Compliance - By John H. Walsh

I. Introduction
II. Foundations
III. Origins
IV. Development
V. Recognition
VI. A Half-Century of History

CHAPTER 3: Core Requirements of a Compliance Program - By David H. Lui

I. Introduction
II. Culture of Compliance
III. Tone at the Top
IV. Written Procedures
V. Testing
VI. Annual Review or Written Report
VII. Requirement to Designate a Chief Compliance Officer
VIII. Reporting Structure
IX. Conclusion

CHAPTER 4: Overview of Compliance Considerations for Advisers to Registered Investment Companies - By Alan R. Gedrich and David F. Roeber

I. Introduction
II. Investment Company Compliance Programs (Rule 38a-1)
III. Overview of Core Substantive Compliance Areas for Investment Companies
IV. Conclusion

CHAPTER 5: Chief Compliance Officers' Relationships with Fund Boards - By J. Christopher Jackson

I. Introduction
II. Evolution of the "Fund CCO"
III. An Approach
IV. Knowing the Board and Its Expectations of the CCO
V. Base Knowledge of The Technical Side:"Competent and Knowledgeable"
VI. Communication: Board and Board Counsel
VII. Fund Service Providers: A Critical Key
VIII. The Soft Skills/Intangibles
IX. Conclusion

CHAPTER 6: Compliance in a Bank Investment Program Environment - By Karen M. Aavik

I. Introduction
II. What Makes Bank Investment Programs Different?
III. Targeted Compliance Issues/Consideration for Bank Investment Programs
IV. Tips/TakeAways for Establishing and Maintaining an Effective BIP Compliance Program
V. Conclusion

CHAPTER 7: Independent Investment Firms Versus Bank-Owned Investment Firms: Differences and Similarities - By Diane P. Novak

I. Introduction
II. Building an Understanding of Industry Participants and Ownership
III. Historical Perspective
IV. Regulation and Regulator Impacts
V. Impacts to the Investment Firm's Compliance Program
VI. Governance and Chief Compliance Officer Reporting
VII. Conclusion

CHAPTER 8: Constructing a Compliance System Across Multiple Distribution Channels - By Michele Hawkins and Patrick Hayes

I. Introduction
II. Constructing an Effective Compliance Framework
III. Conflicts of Interest
IV. Internal Governance and Committee Structures
V. Managing Third-Party Due Diligence
VI. Understanding and Navigating Multiple Regulatory Regimes
VII. Other Potential Considerations for RIAs with Multiple Distribution Channels
VIII. Conclusion

CHAPTER 9: International Broker-Dealer and Investment Adviser Jurisdictional Considerations - By J. Keith Kessel

I. Introduction
II. Foreign Broker-Dealers and Their U.S. Affiliates or U.S. Intermediating Broker-Dealers
III. Foreign Advisers
IV. U.S. Broker-Dealers Engaging in Business in the European Union
V. U.S. Investment Advisers Engaging in Business in the European Union
VI. Conclusion

CHAPTER 10: State Securities Regulators: Forgotten, But Not Gone - By Mark W. Bell

I. Introduction
II. A Cautionary Tale
III. Who (or What) is an Adviser?
IV. State Jurisdiction of Investment Advisers and Their Representatives
V. State Jurisdiction of Broker-Dealers and Their Representatives
VI. Likely Interactions with State Regulators
VII. North American Securities Administrators Association
VIII. Conclusion

CHAPTER 11: Privilege Issues Relating to SEC Inspections: A Primer - By Christopher S. Petito

I. Introduction
II. The Legal Doctrines of Attorney-Client Privilege and Attorney Work Product Privilege
III. Practical Privilege Issues
IV. Conclusion

CHAPTER 12: Compliance and Internal Audit: The Fraternal Twins - By Jerry C. Danielson

I. Introduction
II. Origins
III. Dissimilarities Between Audit and Compliance
IV. Some Further Similarities
V. Auditing—The Process
VI. Additional Tips for Working with Auditors
VII. Conclusion

CHAPTER 13: Performing Due Diligence and Oversight of Third-Party Service Providers - By Michelle L. Jacko, Robert R. Boeche II, Tina Mitchell and Craig Watanabe

I. Introduction
II. Regulatory Expectations for Initial Due Diligence and Ongoing Monitoring Of TPSPs
III. Types of Due Diligence Reviews
IV. Common Challenges for Evaluating Service Providers
V. How to Structure a Due Diligence Program
VI. Best Practices for Documenting a Due Diligence Review
VII. Due Diligence Questionnaires
VIII. Other Due Diligence Considerations
IX. Due Diligence Checklist
X. Conclusion

CHAPTER 14: The Ins and Outs of Outsourcing Compliance - By Mark Alcaide

I. Introduction
II. Regulators Have High Expectations
III. Policies and Procedures Must Live up to Regulators' Expectations
IV. Using Strategic Outsourcing to Meet Regulators' Expectations
V. Regulators' Expectations of CCOs
VI. Office of Compliance Inspections and Examinations Outsourcing Risk Alert
VII. Firms Must Prove to Regulators That They're Serious About Compliance
VIII. Potential Benefits to be Gained from Strategic Outsourcing
IX. Newly Registered Advisers May Benefit Most from Strategic Outsourcing
X. FINRA and Broker-Dealers' Concerns About Outsourcing
XI. Conclusion

CHAPTER 15: Exchange-Traded Products Compliance - By Victor Frye

I. Introduction
II. Legal Structure for Exchange-Traded Products
III. Initial Compliance Structure
IV. Regulatory Review Process and Exemptive Relief
V. Develop Policies and Procedures
VI. Reporting Requirements for Commodity Pools
VII. Significant SEC No-Action Letters Applicable to ETFs
VIII. Conclusion

CHAPTER 16: Private Fund Specific Regulatory Requirements - By Jeff Blumberg

I. Introduction
II. Investment Company Act
III. Private Placements: Rule 506
IV. Commodity Exchange Act
V. Private Fund Adviser Exemption
VI. Fiduciary Status of Private Fund Managers
VII. Disclosure Issues
VIII. Marketing and Advertising
IX. Performance Compensation Issues
X. ERISA/Benefit Plan Asset Issues
XI. FINRA Restricted Person Rules
XII. Anti-Money Laundering Requirements
XIII. Material NonPublic Information and Expert Networks
XIV. Additional Regulatory Filings
XV. Conclusion

CHAPTER 17: Select Issues in Trading Compliance for Investment Advisers - By Matthew J. Fitzgerald

I. Introduction
II. Front and Center: Compliance and Insider Trading
III. The Fiduciary Riddle of Best Execution
IV. Conclusion

CHAPTER 18: Investment Advisers and the Best Execution Obligation - By Mederic ("Med") Daigneault

I. Introduction
II. Practical Application
III. A Broker Is a Broker, Is a Broker…Not
IV. Evaluating Brokerage—"Who, When, What, and How?"
V. Best Execution and Fixed Income Securities
VI. Private Equity and Real Estate Funds
VII. Conflicts of Interest
VIII. Conclusion

CHAPTER 19: Sound Practice Guidelines for Quantitative Investment Managers - By The Writing Committee of Chicago Quantitative Alliance

I. Introduction
II. Methodology and Guiding Principles
III. Scope and Audience
IV. Structure of the Chapter
V. Risk Management
VI. Compliance
VII. Documentation
VIII. Governance
IX. Conclusion

CHAPTER 20: Adviser Custody, Part 2: Managing Private Funds - By Elizabeth M. Knoblock

I. Introduction
II. Regulatory Scheme for Private Fund Custody
III. Private Fund Custody Compliance Options
IV. Unique Disclosure Requirements for Private Fund Custody
V. Relevant Private Fund Custody Enforcement Actions
VI. Guidelines for Private Fund Advisers' Custody Policy and Procedures
VII. Conclusion

Chapter 21: Compliance in the Age of Connectivity - By John H. Walsh

I. Introduction
II. River Rouge and the Origins of Compliance
III. The Electronics Revolution
IV. The Looming Challenge of Connectivity
V. Inherent Compliance
VI. Conclusion

CHAPTER 22: The Future of Compliance - By Andrew Bowden

I. Introduction
II. Culture
III. Advanced Data Analytics
IV. Predictive Analytics
V. Tactical Data Analytics
VI. In the Field
VII. Conclusion

CHAPTER 23: Big Data: Using Data Analytics - By Keith Marks, E. J. Yerzak, Brian DeDonato and Jackie Hallihan

I. Introduction
II. SEC Priorities
III. What is Big Data?
IV. How the Regulators Use Big Data
V. Regulatory Big Data Systems
VI. Leveraging Technology to Manage Compliance Risk
VII. Beyond Big Data: What's Next?
VIII. Conclusion

CHAPTER 24: Conflicts of Interest - By Michael Koffler

I. Introduction
II. Regulatory Approaches to Conflicts
III. Types of Conflicts
IV. Managing Conflicts
V. Conclusion

CHAPTER 25: The Sides of "May": When Is "May" Deemed False and Misleading?- By Elizabeth M. Knoblock and Patricia Flynn

I. Introduction
II. SEC Settlement Orders Involving May
III. SEC Administrative Proceedings
IV. Conclusion

CHAPTER 26: Plain English Writing for Compliance Professionals - By Lois Yurow

I. Introduction
II. Plain Language and Its Benefits
III. Plain Language and Compliance
IV. Plain Language Techniques
V. Conclusion

CHAPTER 27: The Seven Deadly Sins: Common Ways Investment Advisers Violate their Fiduciary Duty

I. Introduction
II. Excessive Fees
III. Abusive Principal Transactions and Transactions Among Affiliates
IV. Insider Trading
V. Duplicative or Unnecessary Services
VI. Valuation Issues
VII. Misdirecting Income and Expenses Among Client Accounts
VIII. Fraud and Ponzi Schemes
IX. Conclusion