Get a Fresh Perspective to Your Annual Review
Forensic testing should be an important component of your compliance program. These tests can allow you to identify compliance issues early on before the SEC or state conducts their own review. Forensic testing can also be incorporated into the annual review of your compliance program. Overall, these meausres demonstrate to regulators that you are proactive in your approach to compliance. Retaining a former SEC staff member at NCA Compliance to perform some or all of your forensic testing provides additional credibility to your clients and regulators.
Potential Areas That May Warrant Testing
Some of the risk areas where additional analysis may be appropriate include:
Trade Allocations – Are your trade allocations fair and equitable to all clients and in accordance with your trade allocation policy?
Valuation – Are securities valued in a manner consistent with your policies and procedures?
Insider Trading – Does an analysis of your trades indicate potential trading on material non-public information?
Best Execution – Are you receiving best execution on the trades you effect for advisory clients?
Fee Calculations – Are your management and/or performance fees being calculated correctly?
Window Dressing – Is trading occurring near the year or quarter end to make the portfolio and/or performance appear better than in actuality.
Already Working with a Consultant?
Even if you are already working with a compliance consultant, there is value in getting a fresh perspective from another consultant that hasn’t been involved in the design and/or testing of your compliance program.