Code of Ethics Regulation – SEC Rule 204A-1
Under U.S. Securities and Exchange (“SEC”) Rule 204A-1, an investment adviser registered with the SEC is required to establish a written code of ethics that outlines the standards of business conduct of the registered investment adviser’s supervised persons and reflects the fiduciary duties of the registered investment adviser. Likewise, numerous state securities regulators require a state registered investment adviser to develop and maintain a written code of ethics consistent with the particular state securities regulator’s rules for registered investment advisers. Moreover, there are several provisions of the governing federal securities law for investment advisers, the Investment Advisers Act of 1940 (“IAA”), that also apply to a state registered investment adviser such as Section 206 of the IAA, which prohibits fraudulent conduct, and Section 204A of the IAA, which requires an investment adviser to maintain and enforce written policies to prevent insider trading.
The development of a code of ethics, compliance policies and supervisory procedures without professional assistance can be challenging to the average registered investment adviser firm. It can be time consuming since most registered investment adviser firms lack technical writers and may not be familiar with all of the applicable regulations and corresponding best practices. You can avoid or mitigate many of these challenges by engaging RND Resources professionals to develop, revise or update your registered investment adviser’s code of ethics, compliance policies and supervisory procedures in order to meet the applicable requirements of your state securities regulator or the SEC.