Any firm registered under Section 203 of the Investment Advisers Act of 1940 must establish maintain, and enforce a written code of ethics. This code of ethics must include standards of business conduct for all supervised persons and standards that reflect your fiduciary obligations and those of the supervised persons. Also, there must include provisions requiring all supervised persons to comply with all applicable federal securities laws, and to promptly report any violations of the code of ethics to a chief compliance officer. Each code of ethics must require that all supervised persons are given a copy of the code and any amendments, and in turn, those persons must provide written acknowledgement of receipt of the code of ethics.

The code of ethics must also include provisions that all access persons file certain reports detailing their security holdings and transactions. The Holdings Report must detail all holdings by the access person and be filed no later than 10 calendar days after becoming an access person, and the data must not be more than 45 days old. This report must be filed at least once each 12 months. The Transactions Report must detail all reportable securities transactions that the access person had direct or indirect beneficial ownership of. Transaction reports must be filed at least 30 days after each calendar quarter and detail all transactions that occurred in that quarter.

A firm’s code of ethics must require all access persons to obtain pre-approval before they directly or indirectly acquire beneficial ownership in any limited offerings or initial product offerings. These reports and pre-approval conditions do not apply to one-man advisers, as they would be submitting everything to themselves. However, they must maintain proper records on all their holdings and transactions.

The code of ethics for a firm is a very important and detailed undertaking. The team at Cobia Compliance can assist you with the establishment and maintenance of your written code. They will also work with you to ensure that all the proper reporting occurs at the assigned times. Click here to contact Cobia today for a consultation.