As we have been discussing on this blog, under the new rules, many advisers to private equity and hedge funds are required to register as investment advisers with the SEC by March 30, 2012. As the deadline for registration approaches, advisers should be preparing to comply with all the requirements of the Advisers Act.
One of the key requirements is for advisers to adopt and enforce a written code of ethics, which is applicable to all supervised persons. The rule specifically requires an adviser’s code of ethics to set forth standards of conduct and require compliance with federal securities laws.
When drafting your code of ethics, be advised that it must include the following:
- A standard (or standards) of business conduct that is required of supervised persons, which standard must reflect the fiduciary obligations of the investment adviser and those of its supervised persons;
- Provisions requiring supervised persons to comply with applicable Federal securities laws;
- Provisions that require all “access persons” (people who have access to non- public client information) to report their personal securities transactions and holdings periodically;
- Provisions requiring supervised persons to report any violations of the code of ethics promptly to the CCO; and
- Provisions requiring the adviser to provide each of its supervised persons with a copy of the code of ethics and any amendments receive a written acknowledgment of their receipt.
The rule also includes several record keeping obligations. For example, in order to ensure that advisers’ employees are made aware of their firms’ standards, advisers must also obtain (and keep) a written acknowledgement from each supervised person confirming that he or she received a copy of the code of ethics and any amendments.
Eckerle Law offers a highest-quality and cost-effective alternative to the traditional law firm model for a wide variety of transactional and regulatory matters serving all your business law needs. Our experienced attorneys also provide a full range of compliance services for investment advisers, offering compliance tools that are tailored to fit the ever changing regulatory landscape as well as your business needs.
If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.