The SEC Office of Compliance Inspections and Examinations ("OCIE") identified potential compliance issues for broker-dealers and investment advisers under SEA Rule 13h-1 ("Large Trader Reporting"). In its new risk alert, OCIE warned of compliance issues related to (i) recordkeeping, (ii) monitoring and (iii) reporting to Electronic Blue Sheets with respect to SEA Rule 13h-1.
OCIE encouraged investment advisers to review their compliance policies and procedures regarding SEA Rule 13h-1 to ensure that they are:
- identifying situations that could lead the investment adviser to become a Large Trader under the Rule;
- timely filing Form 13H, with respect to both the annual filing requirement and amended filings, if any;
- amending Form 13H promptly following the end of a calendar quarter, in the event that any of the information contained within the filing becomes inaccurate for any reason; and
- notifying any broker-dealers through which the investment adviser executes transactions of its Large Trader status.
Additionally, OCIE encouraged broker-dealers to review their Rule 13h-1 compliance policies and procedures to ensure:
- the applicability of SEA Rule 13h-1 to the broker-dealer and its affiliates;
- the timely filing of both the annual filing and any amended filings of Form 13H;
- meeting reporting requirements under Electronic Blue Sheets and the Consolidated Audit Trail, as well as applicable FINRA Rules;
- monitoring customer activity to identify any customers that may be Large Traders, but have not provided their SEC-assigned unique identification numbers, and detailing the process of contacting such customers; and
- identifying and associating new accounts for existing Large Traders.
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