Compliance costs rose 65%from January 2007 through March 2008 for more than 400 investment advisory firms surveyed by four organizations involved in the advisory business.
Compliance costs rose 65%from January 2007 through March 2008 for more than 400 investment advisory firms surveyed by four organizations involved in the advisory business.
According to the 2008 Investment Management Compliance Testing Survey, 30% of the firms reported that their compliance resources were barely adequate or insufficient. Sixty-four percent of the firms had one or fewer than one employee working full time in legal or compliance functions.
Yet 58% of the firms reported that their culture of compliance had improved during the previous year.
The online survey was conducted by ACA Compliance Group, IM Insight newsletter and the Investment Adviser Association Inc., all of Washington, as well as Old Mutual (U.S.) Holdings Inc., an asset management firm in Boston. The survey — of compliance professionals who represent a wide range of advisory firms that are registered with the Securities and Exchange Commission — was conducted in March.
"Employees are buying into the concept of compliance," IAA general counsel Karen Barr said in a statement about the survey. She attributed that to the "tone set by senior management, increased employee training, and policies and procedures that are increasingly written in plain English."
Compliance testing for insider trading has increased significantly, with more than 80% of the industry now testing for insider trading, compared with just 20% in 2005.
"This is a significant increase from prior years and may be driven in part by an informal mandate set out by the SEC staff through its examination program," Amy Yuter, senior compliance officer for Old Mutual Asset Management, said in a statement.
