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IMPORTANT NOTE
Interactive Brokers is providing this template for an investment advisory firm’s
Compliance Manual Table of Contents as a courtesy to investment advisors trading
through the IB platform. This template is designed to focus on the general
requirements for investment advisors registered with the Securities and Exchange
Commission (“SEC”). Many, but not all states, have the same or similar
requirements.
Advisors planning to use this template to draft their Compliance Manual should
review it carefully and consult with legal counsel to ensure that the document is
appropriately customized. Among other things, firms should ensure that the
Compliance Manual they use complies with applicable laws, including any state laws
that may differ from the federal statutes and SEC rules that form the basis of this
template. If you are a state-registered advisor, you should research the rules in your
particular state.
The topics laid out in this template Table of Contents may not all be applicable to all
advisors’ business models or activities. Advisors may also wish to address these
issues in a different order or different manner and/or consolidate related chapters.
This template should not be construed as legal advice and has not been tailored to
address the particular circumstances of any specific registered investment advisor.
COMPLIANCE MANUAL
SAMPLE TABLE OF CONTENTS
Revision History
Date
Author
Description of Revisions
[This section should contain a chart laying out the date, author and substance of any
revisions made to the Compliance Manual over time.]
1. Introduction
1.1. About the Firm’s Compliance Culture
1.2. About This Compliance Manual
1.3. Compliance Manual Amendments
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[The Introduction should lay out the firm’s general compliance philosophy, the purpose
of the Compliance Manual, and the firm’s policies and procedures regarding
amendments to the Compliance Manual.]
2. Firm’s Compliance Organization
2.1. Firm’s Compliance Responsibilities
2.1.1. Fiduciary Duty
2.1.2. Compliance with Applicable Laws and Regulations
2.1.3. Prohibited Activities
2.2. Organizational Chart
2.3. Compliance Responsibilities of Individual Firm Executives
2.4. Chief Compliance Officer’s Role
2.5. Compliance Consultants
2.6. Outside Counsel
[This chapter should describe the firm’s compliance infrastructure, including the role of
the Chief Compliance Officer and the firm’s Compliance Committee (if applicable), the
compliance responsibilities of the firm’s top executives and the firm’s use of compliance
consultants and outside legal counsel.]
3. Supervisory Policies and Procedures
3.1. Compliance Supervision
3.2. Supervision of Personnel
3.2.1. Associated Persons
3.2.2. Investment Advisor Representatives
3.2.3. Sub-Advisors
3.3. Hiring
3.4. Registration Process
3.5. Periodic Personnel Review
3.6. Disciplinary Actions
3.7. Compliance Training
3.8. Political Contributions
[This chapter should lay out how the firm supervises its associated persons, investment
advisor representatives and other employees. It should also describe the firm’s processes
regarding hiring and getting new hires registered. This chapter should also detail the
firm’s periodic review of staff, disciplinary actions, compliance training, and policies
regarding firm personnel’s political contributions.]
4. Books and Records Policies and Procedures
4.1. Required Records
4.2. Retention of Records
4.3. Electronic Maintenance of Records
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[This chapter should describe the firm’s policies and procedures for creating and
maintaining books and records in accordance with the Investment Advisers Act, any
relevant state laws and the firm’s own procedures, including discussions of how
electronic records are preserved.]
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5. Periodic Compliance Policies and Procedures Reviews and Testing
5.1. Annual Compliance Review Process
5.2. Annual Compliance Review Reports
5.3. Interim Reviews
[This chapter should set forth the firm’s policies and procedures for reviewing and
testing the effectiveness of the firm’s compliance procedures and supervisory systems,
including the firm’s procedures governing annual compliance reviews and any reviews
conducted during the course of the year.]
6. Regulatory Exams
6.1. Regulator Access to Firm Offices and Materials
6.2. Compliance Department Consultations with Compliance Consultants and Outside
Counsel
6.3. Compliance Department’s Liaison with Regulators
6.4. Firm Employee Interactions with Regulators
[This chapter should set forth the firm’s policies and procedures for preparing for,
responding to and interacting with regulators during regulatory exams.]
7. Compliance Manual Violations
7.1. Reporting
7.2. Sanctions
[This chapter should discuss how the Compliance Department will handle and respond to
violations of the Investment Advisers Act, any applicable state laws, and the Compliance
Manual as well as employees’ obligations to report such violations.]
8. Registration and Licensing
8.1. Firm Registration and Filings
8.1.1. Form ADV Initial Filing and Amendment Obligations
8.1.2. Delivery of the Form ADV Part 2 Disclosure Statement
8.1.3. Other Regulatory Reporting and Filing Obligations
8.1.3.1.
Form 13F
8.1.3.2.
Schedule 13D
8.1.3.3.
Schedule 13G
8.1.3.4.
Other Federal Filings
8.1.3.5.
State Licensing and Notice Filings
8.2. Investment Advisor Representative Registration
[This chapter should provide an overview of the firm’s and its representatives’
registration, licensing and filing obligations under federal and/or applicable state laws.
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It should also detail the firm’s procedures to ensure that all registrations, reports and
forms are properly and timely filed.]
9. Disclosure Requirements
9.1. Form ADV Part 2 Disclosures – Initial and Annual Delivery Offer
9.1.1. Customer Requests for Form ADV Part 2 Disclosures
9.2. Privacy Notices
9.3. Proxy Voting Policy
9.4. Code of Ethics
9.5. Electronic Delivery of Disclosure Information
[This chapter should discuss the firm’s disclosure obligations to its clients, including how
it will provide clients with the firm’s Form ADV Part 2 Disclosures, Privacy Notices,
Proxy Voting Policies, and Code of Ethics.]
10. Advertising and Marketing
10.1.
Definition of Advertising
10.2.
Prohibited Advertisements
10.2.1. Testimonials
10.2.2. Past Specific Securities Recommendations
10.2.3. Unqualified Use of Charts, Graphs or Formulas
10.2.4. Offers of Free Services
10.2.5. Untrue Statements of Material Fact
10.3.
Advertising Review and Approval Process
10.4.
Performance Advertising Guidelines
10.5.
Use of Senior-Specific and Professional Designations
[This chapter should describe the firm’s policies and procedures regarding advertising
and marketing the firm’s services to new and existing clients and the firm’s process for
approving new marketing materials. Among other things, this chapter should discuss any
relevant limitations on the firm’s advertising necessary to comply with the Investment
Advisers Act and/or applicable state laws.]
11. Client Accounts and Documents
11.1.
Client Advisory Agreements
11.2.
Account Opening Procedures
11.2.1. Determining Suitability
11.3.
Advisory Fees
11.3.1. Performance Fees
11.3.2. Automatic Fee Deductions
11.3.3. Fee Calculation Procedures
11.4.
Custody of Client Assets
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11.4.1. [Policy Prohibiting Custody of Client Assets, if applicable]
11.4.2. Deduction of Advisory Fees from Client Accounts
11.4.3. Accidental Receipt of Client Funds or Securities
11.4.4. Receipt of Third Party Funds
11.4.5. Qualified Custodian
11.4.6. Account Statements
11.4.7. Annual Audits
11.5.
Managing Client Accounts
11.5.1. Monitoring Account Activity
11.5.2. Complaints
11.5.3. Termination of Client Accounts
[This chapter should lay out the firm’s policies and procedures regarding taking in new
clients, including advisory agreements and fees, obtaining sufficient information to
determine what investments are “suitable” for clients and managing custody of client
assets.]
12. Portfolio Management and Trading Practices
12.1.
Client Investment Objectives, Suitability and Restrictions
12.2.
Anti-Churning Policy
12.3.
Valuation of Securities
12.4.
Best Execution
12.5.
Aggregating and Allocating Block Trades
12.6.
Short Sale Procedures
12.7.
Allocation Procedures for Initial Public Offerings
12.8.
Cross Trades
12.9.
Restrictions on Principal and Agency Cross Transactions
12.10.
Directed Brokerage
12.11.
Soft Dollar Practices
12.12.
Securities Order Placement and Review
12.13.
Trade Error Policy
12.13.1.
Trade Error Correction Policy
12.13.2.
Trade Error Notification Procedure
12.13.3.
Error Account
[This chapter should discuss the firm’s policies and procedures regarding the
management of client accounts and trade practices, including how the firm will ensure all
investment recommendations or decisions are suitable for clients; adhering to best
execution obligations; aggregating and allocating block trades to multiple customer
accounts; abiding by restrictions on principal and agency cross transactions; managing
soft dollar arrangements and any conflicts of interest they may create; and trade error
policies and procedures.]
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13. Privacy Policy
13.1.
Privacy of Client Information
13.2.
Permissible Disclosures
13.3.
Permissible Sharing of Information
13.4.
Safeguarding of Client Records and Information
13.5.
Security Standards
13.6.
Privacy Notice
13.6.1. Privacy Notice Delivery
13.6.2. Revised Privacy Notices
13.7.
Identity Theft Red Flags
[This chapter should summarize the firm’s handling of customers’ non-public personal
information and how the firm’s procedures will comply with applicable privacy-related
statutes and rules, including SEC’s Regulation S-P and the Red Flags Rule. Among other
things, the chapter should address how the firm will restrict and limit employee and
outside access to personal private information of clients, and how the firm will provide
privacy notices to clients when their accounts are open and annually after that.]
14. Referral Arrangements with Solicitors
14.1.
Distinction between Affiliated and Unaffiliated Solicitors
14.2.
Firm Policy
14.3.
Qualifications and Registration of Solicitors
14.4.
Written Solicitor Agreement
14.5.
Solicitor’s Disclosure Document
14.6.
Supervision of Solicitor’s Activities
[This chapter will discuss the firm’s use of solicitors (if applicable). This should include
a discussion of how the firm selects and supervises solicitors and any disclosures and
documents that solicitors must supply to prospective clients that they solicit.]
15. Anti-Money Laundering
15.1.
Policy
15.2.
Due Diligence
15.3.
Employee Awareness and Training
15.4.
AML Program
15.4.1. Verification of Client Identity
15.4.2. Independent AML Program Testing
15.5.
AML Compliance Officer
15.6.
AML-Related Reporting
15.6.1. Suspicious Activity Reporting (SARs)
15.6.2. Currency Transaction Reporting (CTRs)
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15.6.3. Currency or Monetary Instrument Transport Reporting (CMIR)
15.7.
Compliance with Office of Foreign Assets Control Regulations
[This chapter will outline the firm’s obligations under any applicable anti-money
laundering provisions, and policies and procedures designed to ensure compliance with
those requirements.]
16. Proxy Voting
16.1.
Declination of Proxy Voting Authority OR Proxy Voting Policies and
Procedures
16.1.1. Best Interest of Clients
16.1.2. Conflicts of Interest between the Firm and Clients
16.2.
Provision of Proxy Voting Policies and Procedures to Clients Upon
Request
16.3.
Providing Clients with Information about Voted Proxies
[This chapter should set forth the firm’s policies and procedures regarding voting
proxies for its clients. For instance, it should discuss whether the firm exercises proxies
on behalf of clients, and if so, the standards the firm applies in exercising proxies. It
should also detail how clients may obtain information about the firm’s proxy voting
policies and procedures and how the firm voted proxies on the clients’ behalf.]
17. Communications
17.1.
Communications Guidelines
17.2.
Presentations and Interactions with the Media
17.3.
Review of Employee Communications
17.4.
Personal Communications
17.5.
Email and Other Electronic Communications
[This chapter will review the firm’s policies and procedures regarding communications
with clients or other communications using company email or systems. It should detail
the firm’s guidelines and processes for monitoring and/or reviewing or approving such
communications.]
18. Social Media Policy
18.1.
General Principles for Using Social Media in the Firm’s Best Interests
18.1.1. Protecting the Firm’s Name, Confidential Information and Intellectual
Property
18.1.2. Respecting Each Social Medium’s Terms of Use
18.1.3. Avoiding Embarrassing Postings
18.2.
Distributing Firm Materials
18.3.
Use of Personal Accounts for Firm Business
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18.4.
Use of Firm Accounts
18.5.
Use of Social Media for Personal Purposes
[This chapter will explain the firm’s policies and procedures relating to its employees’
use of social media tools for business or personal purposes.]
19. Disaster Recovery and Contingency Planning
19.1.
Business Continuity Plan
19.2.
Employee Training
19.3.
Procedures for Complying with the Business Continuity Plan
[This chapter should discuss the firm’s policies and procedures to safeguard client
information, assets and portfolios and the firm’s operations in the event of a business
interruption such as natural disasters or computer failures. The chapter should include a
discussion of the firm’s Business Continuity Plan (a separate document that the firm
should maintain and incorporate as an Appendix to its Compliance Manual).]
20. ERISA Considerations
20.1.
Firm’s Responsibility
20.2.
Definition of an ERISA Plan
20.3.
ERISA Fiduciary Obligations
20.4.
Prudent Man Standard
20.5.
Diversification of Plan Investments
20.6.
Compliance with Plan Documents
20.7.
ERISA Bonding Requirements
[This chapter will lay out the applicability of the Employment Retirement Income
Security Act (“ERISA”) to the firm’s activities and how the firm will comply with ERISA
standards, such as ERISA-mandated fiduciary standards and maintenance of any ERISArequired bonding.]
Appendices
Appendix A
Acknowledgement of Compliance Manual Receipt, Understanding
and Compliance
Appendix B
Code of Ethics [a template Code of Ethics is available in the
Sample Documents tab of IB’s RIA Compliance Center website]
Appendix C
Privacy Policy Notice [a template Privacy Policy Notice is
provided by the SEC and accessible in the Sample Documents tab
of IB’s RIA Compliance Center website]
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Appendix D
Business Continuity Plan [a template Business Continuity Plan is
available in the Sample Documents tab on IB’s RIA Compliance
Center website]
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