Compliance Impact Alert:
Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts
Nov 2024
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Language: English version only
Executive Summary
The recent circular "Circular to licensed corporations engaged in asset management business: Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts" issued by the Securities and Futures Commission (“SFC”), identifies critical deficiencies and misconduct within the asset management sector.
The SFC's findings in appendix part reveal a pressing need for asset managers to strengthen their governance frameworks and compliance mechanisms. This summary serves as an important reminder for asset managers to uphold integrity, transparency, and compliance with regulatory standards.
Key Regulatory Concerns:
Conflicts of Interest | Poor management of conflicts of interest, leading to decisions that favor personal or related interests over those of investors. |
Risk Management Deficiencies | Ineffective risk management procedures, exposing investors to significant risks, including concentration and liquidity risks. |
Insufficient Investor Communication | Inadequate information provided to investors regarding fund performance and risks, hindering informed decision-making. |
Improper Valuation Practices | Use of inappropriate valuation methodologies, obscuring true investment losses and compromising transparency. |
Non-Compliance with Regulatory Requirements | Breaches of the SFC’s Code of Conduct, FMCC, and Internal Control Guidelines, indicating systemic issues within asset management practices. |
Senior Management Accountability | Emphasis on the responsibility of senior management to ensure adherence to standards of conduct and effective compliance programs. |
How We Can Help
ComplianceOne possess extensive experience in the asset management industry and are well-equipped to provide valuable guidance to asset managers in several key areas. Our expertise ensures adherence to regulatory standards and enhances overall compliance practices.
Continuous Support: Stay ahead of regulatory changes with our continuous monitoring and updates, ensuring that you are always in compliance.
Expert Guidance: Benefit from our deep industry expertise and experience, providing you with valuable insights and best practices for managing your assets.
Enhanced Governance: Strengthen your governance frameworks with our tailored solutions, enhancing your operational integrity and investor confidence.
Proactive Risk Management: Identify and mitigate potential risks before they impact your business with our proactive risk management strategies.
Comprehensive Training: Ensure your team is always up-to-date with the latest regulatory requirements and best practices through our ongoing training programs.
Peace of Mind: Focus on your core business activities while we take care of your compliance and risk management needs, providing you with peace of mind.
By using our ongoing compliance service, asset managers can enhance accountability, ensure compliance with regulatory standards, and protect investors' interests. It is crucial for asset managers to critically evaluate their existing frameworks and make necessary adjustments to align with regulatory expectations.
For any inquiries, please refer to our Ongoing Compliance Support Service or feel free to Contact us.