OCIE Urges Advisers To Improve Compliance With Cash Solicitation Rule

Author:Mr Cadwalader, Wickersham & Taft LLP
Profession:Cadwalader, Wickersham & Taft LLP
 
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The SEC Office of Compliance Inspections and Examinations ("OCIE") alerted investment advisers to the most recurrent compliance issues related to the Cash Solicitation Rule (the "rule"). The rule generally prohibits an investment adviser from paying a cash fee to any person who solicits clients for the adviser unless the arrangement complies with various conditions.

In its Risk Alert, the OCIE stated that it observed advisers:

with third-party solicitors that did not provide solicitor disclosure documents to prospective clients or supply inadequate disclosures; that did not, in a timely manner, obtain signed and dated client acknowledgments of receipt of the adviser brochure and the solicitor disclosure document; that paid cash fees to solicitors without sufficient, or any, solicitation agreements in...

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