An investment compliance framework refers to the systems and processes that investment firms establish to ensure compliance with applicable laws, regulations and industry standards. As investments grow more complex globally, having a robust compliance program has become essential for protecting investors and ensuring fair markets. This article discusses key elements that comprise an effective investment compliance framework.
Policies and procedures for managing conflicts of interest
Content on the policies and procedures needed to properly disclose and manage conflicts of interest that may arise between an investment firm and its clients or employees.
Supervision systems for monitoring employee activities
Content on the supervisory controls and monitoring systems required to oversee investment professionals’ personal trading, outside business activities, gifts and entertainment, etc.
Training programs covering regulations and standards
Content on the importance of comprehensive and ongoing training programs to ensure employees understand their compliance obligations.
Processes for reporting and investigating violations
Content on whistleblower and reporting mechanisms to detect compliance breaches plus protocols for investigating suspected violations.
An investment compliance framework with robust policies, supervision controls, training and reporting processes is fundamental for managing regulatory risk and protecting investor interests.