ACA Performance Insight - February 2017

February 21, 2017

Introduction

The February 2017 edition of Performance Insight covers the similarities of complying with the
rules and requirements of both the SEC and GIPS standards, proposed revisions to the Guidance
Statement on the Use of Supplemental Information, as well many other industry hot topics.

In this edition...

Complying with the Rules and Requirements of Both the SEC and GIPS Standards: Navigating Key Similarities and Differences

Exposure Draft of the Revised Guidance Statement on the Use of Supplemental Information

Firm Notification Requirement – 2017 Form Now Available

Upcoming Events

Complimentary Webcasts

Please do not hesitate to contact us with any questions.

Complying with the Rules and Requirements of Both the SEC and GIPS Standards: Navigating Key Similarities and Differences

The Global Investment Performance Standards (“GIPS®”) are a set of voluntary, ethical standards developed by CFA Institute in partnership with other organizations worldwide. The creation of the GIPS standards was spurred by a need for prospective investors to be able to make meaningful comparisons of investment performance across multiple managers, for any given strategy. As acceptance of the GIPS standards continues to spread globally, adoption remains especially strong in the United States. Managers that are registered with the U.S. Securities and Exchange Commission (“SEC”) as investment advisers under the Investment Advisers Act of 1940 (“Advisers Act”) and that claim compliance with the GIPS standards have an obligation to comply with the requirements set forth by both the SEC and CFA Institute.

While there are many similarities between the rules under the Advisers Act and the requirements of the GIPS standards, there are some notable differences. Our experience working with compliance professionals gives us an understanding of the challenges of navigating both frameworks. This article will compare and contrast the key differences between the Advisers Act and the GIPS standards relating to the presentation of investment performance.

Ultimately, the mission of both bodies is to ensure investors are not misled and are provided with full and fair information with respect to their current and/or future investments. This article does not attempt to identify every difference between the Advisers Act and the GIPS standards.

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Exposure Draft of the Revised Guidance Statement on the Use of Supplemental Information

Proposed revisions to the Guidance Statement on the Use of Supplemental Information were released for public comment on December 1, 2016. The deadline for submitting comments is February 28, 2017. We discuss key points from this draft Guidance Statement below.

Why is an update to this Guidance Statement necessary?
The GIPS Technical Committee reviews the guidance, interpretations, and Q&As of the GIPS standards. Over time it became apparent there were elements of the original, and current, Guidance Statement that needed clarification. The current Guidance Statement on the Use of Supplemental Information defines supplemental information as “any performance-related information included as part of a compliant presentation that supplements or enhances the required and/or recommended provisions of the GIPS standards.” It does not, however, define the term ‘compliant presentation’ therefore there was much confusion over what exactly had to be labeled as supplemental information and in what circumstances. Specifically, it was unclear whether or not performance-related information needed to be labeled as supplemental information if it appeared in a pitch book that contained a compliant presentation as an appendix.

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Firm Notification Requirement – 2017 Form Now Available

Firms that claim compliance with the GIPS standards are required to notify CFA Institute of their claim of compliance. Each firm must submit the GIPS Compliance Form annually, by June 30th. Any data included in this form must be as of the prior December 31st. Firms completing the form currently must include data as of December 31, 2016. Note that the form can be submitted anytime between now and June 30th and is not dependent upon completion of a firm’s 2016 verification. The 2017 form is now available and includes a few updates.

  • ability to look up a previously submitted notification (need name and contact info used when last submitted)
  • create a login
  • on-the-fly editing

A link to the GIPS Compliance Form is here.

 


Upcoming Events

ACA Spring 2017 Compliance Conference
May 3-5, 2017
PGA National Resort & Spa
Palm Beach Gardens, FL

The ACA Spring 2017 Compliance Conference will again include a performance track focused specifically on issues related to performance measurement and the GIPS standards. For more information on topics and/or the agenda, click here.

 


Complimentary Webcasts

Upcoming webcast

Navigating Regulatory Challenges with Wrap Programs

Wednesday, February 22, 2017, 11:00a.m.-12:00p.m. EST

Speakers:
Crista DesRochers, CIPM, Managing Director, ACA Performance Services
Michelina Cuccia, Director, ACA Compliance Group

Please join Crista DesRochers, Managing Director at ACA Performance Services, and Michelina Cuccia, Director at ACA Compliance Group, on February 22nd for a discussion on minimizing regulatory risk and best practices related to wrap fee programs from both an SEC and GIPS standards perspective. The webcast will focus on:

  • recent SEC cases and related findings;
  • record keeping requirements;
  • proper due diligence to rely on 3rd party data;
  • performance calculations and related wrap fees;
  • marketing materials and disclosures;
  • GIPS compliance requirements and best practices; and
  • UMA accounts.

To register, click here.

Replays available

Click here to view all ACA webcasts.