Investment Adviser Compliance Exam Materials

Books and Records
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Compliance Exam Materials
I. Books & Records
II. Written Supervisory Procedures
III. Code of Ethics
IV. Custody
V. IA Contract Review List
VI. IA Exam Document Checklist

A. Records required for all advisers:

  1. Journals - a record of receipts and disbursements entered as they occur. This forms the basis for entries into the Ledger.
  2. General Ledger - and any auxiliary ledgers or other comparable records that reflect asset, liability, reserve, capital, income and expense accounts. The general ledger contains account sheets for each item on the balance sheet and income statement.
  3. Order Memoranda - terms and conditions of every securities order, any modification or cancellation; the person who recommended the transaction; person who placed the order; account for which entered; date; broker-dealer or bank that executes the order; designation of discretionary power, if used.
  4. Bank Records - checkbooks, statements, canceled checks, cash reconciliations.
  5. Bills and Statements - all the bills the adviser receives that relate to the business.
  6. Trial balances, financial statements and other financial records, reflecting amounts included in the account balance of each ledger account in the general ledger.
  7. Written communications - all written communications (including those transmitted electronically) sent or received by the adviser relating to its business or involving correspondence with clients.
  8. List of discretionary accounts - identify all clients for whom the adviser has discretionary power.
  9. Powers - copies of all powers granted by clients to the adviser.
  10. Written agreements - copy of every agreement the adviser has entered into.
  11. Copies of all advertising - radio, TV, printed ads, letters, anything sent to ten or more persons.
  12. Advisory representatives personal transactions - personal securities transactions of persons who work for the adviser and give investment advice.
  13. Other advisory transactions - personal securities transactions of principals of the adviser whose function is something other than giving investment advice.
  14. Records of disclosure statements and dates given to clients-complete consecutive record of disclosure documents or statements and a record of the dates they were provided to clients or prospects.
  15. Solicitors' disclosure statements - file of solicitor's disclosure statements and client acknowledgment of receipt.
  16. Backup information for performance claims - this information must be maintained if the adviser makes any claims regarding performance of client accounts.
  17. Suitability - customer information forms or other documents recording information used to determine suitability of recommendations for each client.
  18. Client account statements if sent by the adviser. Statements should include the following:
    1. the funds and securities in the client’s account,
    2. the amount of funds and securities maintained in the client’s account at the end of the period,
    3. any transactions that were made during that quarterly statement period.
  19. Client billing statements or notice of fee deduction. Billing statements should include the following:
    1. formula used to calculate the fee,
    2. the amount of assets under management the fee is based on,
    3. the time period covered by the fee.
  20. Supervision - written supervisory procedures designed to prevent and detect violations, including how the procedures will be implemented.

B. Retention Period - All of the above records are required to be maintained by the adviser in an easily accessible place for a period of five years from the end of the fiscal year during which the last entry was made on the records. For the first two years, the record must be maintained in the adviser's principal office. Article of incorporation, partnership articles, minute books, stock certificates and the like must be maintained in the adviser's principal office and must be preserved for at least three years after the termination of the enterprise.

C. Storage Medium - The required records may be maintained on paper, film, or electronic media, but the record must be capable of being made immediately available to an examiner upon request. Film or electronic files must be duplicated and the copy stored separately from the basic record.

The preceding information has been prepared for your convenience to provide assistance in meeting the requirements for investment advisers under the Oklahoma Uniform Securities Act of 2004 (Act) and the Rules of the Oklahoma Securities Commission and the Administrator of the Department of Securities (Rules). Please note, however, that all provisions of the Act and Rules are applicable and control over this information if there is any variance therein.

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