After analyzing deficiency letters from over 1,500 investment adviser examinations, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) released a risk alert regarding the most common deficiencies related to best execution.
Some examples of the most common deficiencies identified by OCIE included:
- Not performing best execution reviews
Not considering materially relevant factors during best execution reviews
Not seeking comparisons from other broker-dealers
Not fully disclosing best execution practices
Not disclosing soft dollars arrangements
Not properly administering mixed use allocations
Inadequate policies and procedures relating to best execution
- Not following best execution policies and procedures
You can read the published OCIE Risk Alert here. We routinely support our clients in the development and implementation of best execution reviews, so please feel free to contact our experts with any further questions.