SEI Investments Company · NASDAQ:SEIC
SEI Investments — SEI Top Compliance Issues Pres
31 slides from SEI Investments's investor presentation, Dec 9, 2004
Slide 1: The Top 7 Compliance Issues for 2005
The Top 7 Compliance Issues for 2005 Web Seminar Presentation December 9, 2004 © 2007 SEI Investments Developments, Inc.
Slide 2: Welcome
Welcome Format of today’s seminar – Please press F5 to view the presentation in full screen All phones will be on mute If you have trouble hearing or viewing the presentation, press *0 and an operator will assist you. Copies of the presentation will be available early next week. Watch for ou
Slide 3: How To Ask A Question
How To Ask A Question To ask a question, please send your question to the host via the “chat” feature on the Participants tab. The Top 7 Compliance Issues for 2005 December 9, 2004 3
Slide 4: What is the SEI Knowledge Partnership?
What is the SEI Knowledge Partnership? The SEI Knowledge Partnership is an ongoing source of actionable business intelligence and advice for SEI’s investment management clients. It engages clients and industry experts in analyzing the trends and issues that will reshape business conditions in the ye
Slide 5: Agenda
Agenda 1. Regulatory Update 2. Issue-by-Issue Overview Implementing your compliance program Creating a culture of compliance Annual program assessment Portfolio trading Hedge fund advisor registration E-mail retention Client relations 3. Suggestions for 2005 Agenda Topics 4. Participan
Slide 6: Today's Presenters
Today’s Presenters Thomas Lemke Partner, Morgan, Lewis & Bockius, LLP Thomas P. Lemke is in the Business and Finance Investment Management Practice resident in the Washington, D.C. office. He concentrates his practice on the full spectrum of investment management matters, including advising mutual f
Slide 7: Regulatory Update
Regulatory Update Release of Hedge Fund Advisor Registration Rule Text (pgs. 8-9) Fund Transaction Costs/Soft Dollars - NASD Task Force Report (pg. 6) Code of Ethics compliance date extension (pg. 4) Fund Governance Issues - indep. chairman provision (pg. 10) Breaking developments www.seig
Slide 8: Compliance Program Monitoring, Testing and Reporting
Compliance Program (“CP”) Monitoring, Issue-by-Issue Testing and Reporting Overview A nicely bound compliance manual does not mean your CP has been “implemented” (written policies and procedures are only the first step) Key policies and procedures must be monitored for adherence by all personnel
Slide 9: Compliance Program Monitoring, Testing and Reporting (Cont.)
Compliance Program (“CP”) Monitoring, Issue-by-Issue Testing and Reporting (Cont.) Overview Don’t try to do it all by yourself “Take credit” for testing that may already exist in certain areas (understand results) Internal audit department SAS 70 procedures that might be applicable Testing
Slide 10: CP Testing Guidelines
Issue-by-Issue CP Testing Guidelines Overview Follow a testing plan. Haphazard approach will not meet board expectations If resources are limited, use risk-based approach for selecting areas for earliest testing (a good approach even if adequate resources exist) Where possible, monitor and tes
Slide 11: CP Testing Guidelines (Cont.)
Issue-by-Issue CP Testing Guidelines (Cont.) Overview Take exceptions seriously. Share “exception situations” with legal department and with board as soon as they are known Enforce sanctions & reprimands consistently regardless of who offending party is Be willing to sanction or reprimand seni
Slide 12: Creating a Culture of Compliance
Issue-by-Issue Creating a Culture of Compliance Overview Indicators of a strong “culture of compliance”: CCO has the appropriate level of “clout” within the organization CCO has developed and promulgated a 2005 compliance strategy addressing Key objectives and initiatives Roles and responsib
Slide 13: Creating a Culture of Compliance (Cont.)
Issue-by-Issue Creating a Culture of Compliance (Cont.) Overview Compliance department has appropriate level of staffing, support & funding The temptation to characterize current compliance efforts as short term is discouraged, and instead compliance efforts are treated as the early stages of pe
Slide 14: Annual Compliance Program Assessment
Issue-by-Issue Annual Compliance Program Assessment Overview Expect boards to be more inquisitive than when CP was originally approved (the “sympathy factor” and the “we’re all overwhelmed factor” have dissipated) Treat process with same care and urgency as when original CP was approved Be pro
Slide 15: Annual Compliance Program Assessment (Cont.)
Annual Compliance Program Assessment Issue-by-Issue (Cont.) Overview Adequately address the CP of all service providers What documentation have they provided? Ask them same questions your board will be asking you and present those results How did they test their own CPs? (do you know the res
Slide 16: Annual Compliance Program Assessment (Cont.)
Annual Compliance Program Assessment Issue-by-Issue (Cont.) Overview Be able to categorize approaches taken as either “industry standard” or “best practice.” Boards will want rationale for going in that direction. Boards will also want to know: How CP has changed, if at all, since original rat
Slide 17: Portfolio Trading
Issue-by-Issue Portfolio Trading Overview Report of the NASD Mutual Fund Task Force – Soft Dollars and Portfolio Transaction Costs sent to SEC on Nov. 15th Comprised of senior executives who represent broker-dealers and mutual fund management Unanimous agreement that Section 28(e) safe harbor
Slide 18: Portfolio Trading (Cont.)
Issue-by-Issue Portfolio Trading (Cont.) Overview Specific recommendations regarding soft dollars: Narrow definition of “research” to focus on intellectual content Ensure that fund boards receive adequate information about soft dollars Mandate enhanced prospectus disclosure to foster investo
Slide 19: Hedge Fund Advisor Registration
Issue-by-Issue Hedge Fund Advisor Registration Overview SEC adopted proposal as proposed, with minor modifications/clarifications Release is a monster – 160 pages and almost 500 painstakingly-detailed footnotes Most practical guidance in footnotes Includes a 30 page dissent Effective date:
Slide 20: Hedge Fund Advisor Registration (Cont.)
Issue-by-Issue Hedge Fund Advisor Registration (Cont.) Overview Rule 203(b)(3)-2 requires adviser to “look through” private funds and count each investor for purposes of the 14 client limit for private advisers SEC issued modifications/clarifications on the following issues: Application of min
Slide 21: Hedge Fund Advisor Registration (Cont.)
Issue-by-Issue Hedge Fund Advisor Registration (Cont.) Overview Dissent Hard-hitting disagreement with majority Focuses on three concerns: Viable alternatives that should have been considered Pretext for rule does not stand scrutiny SEC’s limited resources will be diverted What happens
Slide 22: E-Mail Retention
E-Mail Retention Issue-by-Issue Overview SEC has been making routine requests to view e-mails for last 15 months Most requests have asked for data in electronically-searchable format for either: All e-mails, or All e-mails for certain individuals, typically high-level management There are
Slide 23: E-Mail Retention (Cont.)
Issue-by-Issue E-Mail Retention (Cont.) Overview Complying with SEC’s “implied” stance can have real costs. More definitive guidance is needed from SEC before technology investment decisions are made SEC has hinted it intends to issue guidance about firms’ legal obligations In a letter dated 1
Slide 24: The ICAA Request to the SEC
Issue-by-Issue The ICAA Request to the SEC Overview The ICAA letter to the SEC in general seeks further guidance on the e-mail retention issue and specifically seeks guidance for the following: Confirmation that requirement to retain all e-mails with relevant subject matter can be accomplished in
Slide 25: The ICAA Request to the SEC (Cont.)
Issue-by-Issue The ICAA Request to the SEC (Cont.) Overview Confirmation that until otherwise explicitly required by rule, registrants will be permitted to produce e-mail data to the SEC in any format or medium Clarification that the monitoring and review of e-mails is not required, but is a met
Slide 26: Recordkeeping Rules
Issue-by-Issue Recordkeeping Rules Overview Rule 204-2 of the Advisers Act is referred to as the “record keeping rule” Applies to adviser employees Pertains to ledgers, orders, financial statements, etc. Includes written communications received and sent relating to: Recommendations and adv
Slide 27: Client Experience
Issue-by-Issue Client Experience Overview Turn your compliance efforts into a competitive advantage: Proactive communication with clients about your compliance philosophy and approach If you’re doing good things, tell your clients about it Comply with new regulations early Provide periodic s
Slide 28: Suggestions for 2005 Agenda Topics
Issue-by-Issue Suggestions for 2005 Agenda Topics Overview Survey in January on your top concerns and issues Questions and comments are always welcomed: [email protected] The Top 7 Compliance Issues for 2005 December 9, 2004 28
Slide 29: Questions From The Participants
Questions From The Participants The Top 7 Compliance Issues for 2005 December 9, 2004 29
Slide 30: We hope you found today's presentation valuable and informative
We hope you found today’s presentation valuable and informative. Please feel to send comments and suggestions to [email protected]. Your feedback is important to us. Presentation slides will be made available early next week. You will be notified by e-mail. Our 2005 Legal & Regulatory
Slide 31: Thank you.
Thank you. The SEI Knowledge Partnership is a service of the Investment Manager Services unit of SEI. This information is provided for educational purposes only and is not intended to provide legal advice. © 2007 SEI Investments Developments, Inc. SEI does not claim responsibility for the accuracy o