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Compliance Corner

Welcome to Compliance Corner! ICSGroup will bring you monthly updates on regulatory trends and issues affecting investment advisors, particularly the issues that are most relevant to advisors of PE funds. Our goal is to help NAIC member firms develop and implement robust compliance programs that meet regulatory requirements and institutional investor expectations. We hope you find this information helpful and welcome your feedback. – Medina Jett, President, ICSGroup

Marketing & Advertising Pitfalls: What’s an Investment Adviser to Do?

Marketing & Advertising Pitfalls: What’s an Investment Adviser to Do?

In September 2017, we provided a summary of the SEC’s Advertising Risk Alert noting that the most common deficiencies cited were all related to misleading performance advertising. Now we will look more broadly at the marketing and advertising challenges advisers face and offer guidance on how to avoid common marketing and advertising pitfalls, namely the use of testimonials and endorsements, social media, and performance advertising. Rule 206(4)-1 (the “Testimonial Rule”) explicitly prohibits testimonials and endorsements of any kind. The SEC consistently interprets testimonials to include any statement expressing a client’s experience with an advisor or endorsement of an adviser. Testimonials…
2017 – The Year of SEC Exams

2017 – The Year of SEC Exams

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. Now that the holidays are behind us and we look forward to a promising new year,…
Amendments to Form ADV are Now Effective

Amendments to Form ADV are Now Effective

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. The amendments to Form ADV became effective on October 1st. Unless you registered with the SEC…
CABs Now Subject to Pay-To-Play Rules

CABs Now Subject to Pay-To-Play Rules

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. In August 2016 the SEC approved FINRA rules for a new category of advisers known as…
SEC Issues Advertising Risk Alert

SEC Issues Advertising Risk Alert

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. In September 2017, the OCIE issued a Risk Alert notifying advisors of the most common deficiencies…
The Rise of Text Messaging for Business Purposes

The Rise of Text Messaging for Business Purposes

Text messaging. We’re all doing it. It’s not only easy to do, but also a highly effective and efficient way to communicate. According to a survey conducted by Smarsh, a firm specializing in cloud-based archiving solutions, text messaging is the most requested channel for business use by employees in financial firms, up over 20 percent from last year. The increasing number of professionals using text messaging for business purposes has caught the attention of regulators and raises compliance and supervision concerns. During 2016 SEC examinations, twenty-one percent of firms examined were required to provide their mobile device communications policy. Drafting…
New Disclosures for Form ADV

New Disclosures for Form ADV

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. Beginning on October 1, 2017, investment advisers will be expected to comply with the various new…
Preparing for SEC Examinations

Preparing for SEC Examinations

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. Over the past few months several ICSGroup clients have had their very first SEC examination. We’ve…
Valuations as a Private Equity Risk

Valuations as a Private Equity Risk

While accounting standards, valuation frameworks and industry guidelines have been moving towards standardization of valuation principles, private equity (“PE”) fund managers still have substantial freedom when valuing their portfolio companies. For example, there is inevitable temptations to present interim performance numbers in a particularly favorable light when raising a follow-on fund or limiting write-downs during down markets. On the other hand, there may be general incentives to smooth returns by using conservative values in normal or good times to avoid a negative surprise to investors when assets are ultimately sold. Recent academic studies have shown that some advisers do in…
Creating Value out of Environmental, Social and Governance Integration

Creating Value out of Environmental, Social and Governance Integration

About our Contributors ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions. The focus on environmental, social and governance (ESG) as a means of creating sustainable value is…
Five Most Common Compliance Deficiencies

Five Most Common Compliance Deficiencies

On February 7, 2017, the Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) released a risk alert identifying the five compliance areas most commonly cited in deficiency letters sent to SEC-registered investment advisers (“RIA”). The risk alert focuses on deficiency letters from more than 1,000 RIA audits conducted over the past two years. This list of top deficiencies can help investment advisers develop a stronger compliance program as well as prepare for a regulatory examination. The OCIE’s top five compliance deficiencies fall under five categories: Compliance Policies and Procedures Required regulatory filings Custody Code of Ethics…
A Strong Ethics Culture:  How Does Your Firm Rate?

A Strong Ethics Culture: How Does Your Firm Rate?

Assessing your firm’s ethics culture is the first step in developing and maintaining a strong ethics culture and, ultimately, to earning investors’ trust in your firm. In remarks from the 2016 FINRA Annual Conference, Chairman and CEO of FINRA, Richard Ketchum stated: “Having spent nearly four decades regulating the securities industry, and spending some time with a firm, I can say unequivocally that firm culture has a profound influence on how a securities firm conducts its business. I can’t count the number of times throughout my career where a culture that doesn’t value ethical behavior has led to compliance failures…

Founded in 2008, ICSGroup is a boutique compliance firm that provides regulatory compliance services to registered investment advisors, including advisors to private equity funds, hedge funds and fund of funds, banking institutions and insurance companies. Prior to starting ICSGroup, its founder, Medina Jett, served in senior compliance roles at several large financial services companies where, in spite of good values and a strong ethical culture, compliance was often at odds with business interests.

Medina envisioned an easier way to deliver compliance services. ICSGroup partners with its clients to create risk-appropriate compliance solutions, to integrate compliance procedures seamlessly into business practices, and to create a culture of employee engagement, while meeting regulatory expectations and enhancing investor confidence. ICSGroup is a minority and woman-owned business enterprise with offices in downtown Hartford, CT and downtown Manhattan.

Contact ICS Group

ICSGroup offers a variety of compliance services ranging from a la carte services to fully outsourcing the compliance function.