New Rules, Proposed Rules, Guidance and Alerts –

SEC STAFF GUIDANCE AND ALERTS –

OCIE Publishes Risk Alert on Compliance Issues Relating to Best Execution –

On July 11, 2018, the Office of Compliance Inspections and Examinations (OCIE) of the SEC published a National Exam Program Risk Alert (the Risk Alert) concerning compliance issues related to investment advisers’ best execution obligations under the Investment Advisers Act of 1940 (the Advisers Act). The Risk Alert is intended to highlight for advisers risks and issues associated with best execution that OCIE staff has identified in deficiency letters from over 1,500 adviser examinations. OCIE “encourages advisers to reflect upon their own practices, policies, and procedures in these areas.”

Background: Duty to Seek Best Execution –

As fiduciaries, investment advisers owe their clients a duty of care, which includes, among other things, the duty to seek best execution of a client’s transactions where the adviser has the responsibility to select broker-dealers to execute client trades. To satisfy this obligation, an adviser must seek to obtain the execution of transactions for each of its clients such that the client’s total cost or proceeds in each transaction are the most favorable under the circumstances; that is, the adviser should maximize value for the client given the particular circumstances...