There is no specific regulatory requirement that says registered investment advisors must provide "mandatory" training to their employees. However, identical and related training questions are prominent on the current SEC regulatory examination. In addition, the preparedness, ability and experience of the firm's CCO is now a very relevant issue during examinations, especially if the SEC is concerned that the CCO position is not filled by an individual who has the requisite knowledge, ability and authority within the firm to adequately discharge his or her duties.
It would be prudent for advisors to adopt a training process for their employees. I have devised our clients' policies and procedures such that the firm will provide initial training and information to new employees and a mandatory annual meeting for the entire staff (participation via teleconference or video conferencing is sufficient for firms with branch offices). Of course, many firms do and will continue to hold compliance-related meetings more often than annually.
Upon commencement of employment there should be an orientation that is basic to all firm employees and representatives, including the receipt and acknowledgment of the firm's policies and procedures and the underlying basic requirements thereof. These requirements include the firm's code of ethics, including the reporting of personal securities transactions and the submission of an initial holdings report; acknowledgment of the firm's confidentiality obligations per Regulation S-P as generally set forth in the firm's privacy policy and as may be expanded in a separate confidentiality agreement; and a disaster plan so that employees can continue to serve firm clients in the event that the firm's offices are unavailable.
