Build a gap list for an adviser's written compliance program
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Compare the adviser's written policies with three questions: whether they are reasonably designed to prevent violations of the Advisers Act and the Commission's rules, whether a review at least annually is described, and whether a chief compliance officer is named. Quote no policy into a new manual.
- What the lawyer must review
- 17 C.F.R. § 275.206(4)-7 requires an adviser to adopt and implement written policies and procedures reasonably designed to prevent violation of the Act and the rules, to review at least annually the adequacy of those policies and the effectiveness of their implementation, and to designate a supervised person as chief compliance officer. SEC press release 2024-36 describes charges against two investment advisers for AI-related misstatements. A gap list is not the policy. You write any policy that will be adopted. Opinion 512 and Rule 1.6 apply if client or firm records go into the tool.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes identifying points for review. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.