Mutual Funds – Fund Compliance Services

Chief Compliance Officer Solutions

The compliance requirements for registered investment vehicles has grown increasingly complex since the implementation of Rule 38a-1 of the Investment Company Act of 1940 (“1940 Act”).

All mutual fund trusts must have a Chief Compliance Officer (CCO) to ensure they meet today’s stringent compliance requirements. For advisors who register their mutual funds in a series trust with Gemini, we provide an experienced, qualified and independent person to act as the fund’s CCO. In that capacity, we report directly to the fund’s board of directors/trustees.

Those who operate a standalone fund with Gemini can be referred to our sister firm, Northern Lights Compliance Services, LLC (NLCS). NLCS has been servicing funds for more than 10 years and employs attorneys, former regulators, former auditors, former CCOs and operations professionals who are experts in fund compliance requirements and average more than 25 years of experience in the financial services industry. This varied experience enables us to consider the steady stream of new regulations from many different perspectives, resulting in practical and cost effective implementation strategies.

Investment Company Services: Named CCO

NLCS’s goal is to help ensure that mutual funds meet the SEC’s stringent regulatory compliance requirements. We help advisors comply with the federal securities laws (defined by Rule 38a- l) and meet the responsibilities as outlined by Rule 38a-1 under the 1940 Act, as amended. Our broad program is tailored to meet the needs of small- to medium-sized fund groups who are seeking a cost-effective alternative to hiring a CCO on a full-time basis. NLCS offers two main services:

  • An experienced, qualified and independent person to act as CCO, or
  • Compliance support and services at the level needed by the advisor, including:
  • Risk Management and Policies/Procedures Review
    • Evaluate internal control structures of the various service providers
    • Review and assess fund policies and procedures
    • Review policies and procedures of the fund’s service providers, underwriter, administrator, accounting and transfer agent
    Amending and Drafting of Policies/Procedures
    • Ensure current practices are compliant with the federal securities laws and rules
    • Recommend amendments and drafting of policies/procedures
    Ongoing Monitoring and Board Reporting
    • Conduct an annual review to assess compliance with and effectiveness of the trust’s compliance program
    • Conduct oversight of the fund service provider’s compliance programs and changes thereto
    • Conduct compliance site visits to the fund service providers
    • Review administrator-prepared reports for regulatory and prospectus compliance
    • Review regulatory filings from a compliance perspective
    • Participate in fair valuation committee meetings
    • Participate in regulatory examinations as appropriate
    • Attend quarterly board meetings in person or via telephone, providing quarterly compliance updates
    • Prepare a written annual compliance report to the fund’s board of directors addressing:
      • The operation of the policies and procedures of the fund and its service providers
      • Any material changes made to those policies and procedures since the date of the last report
      • Any material changes to the policies and procedures recommended as a result of the annual review
      • Any “material compliance matter” as defined in Rule 38a- I of the 1940 Act

    Investment Company Services: CCO Support

    CCO Support Services Include Assisting in:

    • Updating compliance manual, code of ethics and other documentation supporting the compliance program
    • Testing, such as review of:
      • Required submissions under the code of ethics
      • Timeliness of regulatory filings
      • Compliance with portfolio holdings dissemination policy
      • NAVs with unusual changes
      • Results of sales back-testing
    • Review of compliance programs of fund service providers, including site visits
    • Completion of annual compliance review as required by Rule 38a-1
    • Completion of risk assessment matrix
    • Review of cyber-security related policies and procedures

    INVESTMENT ADVISOR SERVICES

    NLCS can help existing registered investment advisors keep pace with the rapidly changing compliance environment by offering a full complement of compliance services. We collaborate with each firm’s management to identify regulatory challenges and then build and implement practical solutions designed to meet the firm’s regulatory responsibilities.

    Compliance

    NLCS’s goal is to help ensure that mutual funds meet the SEC’s stringent regulatory compliance requirements. We help advisors comply with the federal securities laws (defined by Rule 38a- l) and meet the responsibilities as outlined by Rule 38a-1 under the 1940 Act, as amended. Our broad program is tailored to meet the needs of small- to medium-sized fund groups who are seeking a cost-effective alternative to hiring a CCO on a full-time basis. NLCS offers two main services:

  • An experienced, qualified and independent person to act as CCO, or
  • Compliance support and services at the level needed by the advisor, including:
  • Registration

    NLCS can work directly with the firm’s Managing Principal or Chief Compliance Officer to identify registration challenges and then build and implement solutions to meet regulatory responsibilities. We can relieve the burden of having to find competent licensing and registration personnel by performing licensing and registration functions for the advisor. Alternatively, the advisor can purchase cybersecurity, risk assessments or mock audits as the need arises.

    Ad Review

    Compliance with advertising regulations in the investment advisory industry is a challenge for any company since most of the rules are not specific or clear. The cost of not meeting this challenge could be hefty fines or a damaged reputation. With our advertising review service, we partner with the firm’s team to ensure all advertising and marketing is being reviewed thoroughly and efficiently.

    Training

    As the financial services industry continues to evolve and become more complex, it is essential that every firm has properly-trained compliance professionals in place to protect them from regulatory scrutiny. It is often challenging to find quality training curriculum to keep compliance personnel up to date on the latest regulatory requirements. NLCS can train compliance staff on the duties and responsibilities associated with their particular compliance duties or provide guidance on an as-needed basis.

    CCO Support

    CCO Support Services Include Assisting in:

    • Updating compliance manual, code of ethics and other documentation supporting the compliance program
    • Testing, such as review of:
      • Required submissions under the code of ethics
      • Timeliness of regulatory filings
      • Compliance with portfolio holdings dissemination policy
      • NAVs with unusual changes
      • Results of sales back-testing
    • Review of compliance programs of fund service providers, including site visits
    • Completion of annual compliance review as required by Rule 38a-1
    • Completion of risk assessment matrix
    • Review of cyber-security related policies and procedures

    Additional Services

    Cybersecurity

    NLCS offers a cybersecurity solution to assist financial professionals in upholding their fiduciary duty to clients and investors by adequately overseeing and addressing cybersecurity risks.

    Risk Assessments

    NLCS’s services can provide assistance with a firm’s annual 206(4)-7 risk assessment and compliance review.

    Mock Audits

    We can conduct a mock SEC examination of an investment advisor. NLCS will visit the firm, conduct interviews of key personnel and principals, review a sampling of the investment advisory documents likely to be requested by the SEC and prepare a written report of findings.