Framework Financial Services
SEC 206(4)-7
Rule 206(4)-7 under the Investment Advisers Act of 1940, usually called the Compliance Program Rule, makes it unlawful for an SEC-registered investment adviser to advise clients unless it does three things: adopts and implements written policies and procedures reasonably designed to prevent violations of the Advisers Act, reviews those policies at least annually for adequacy and effectiveness, and designates a chief compliance officer to administer them.
The rule has been in place since 2004 and is the backbone of every RIA compliance manual.
What an adviser needs in writing is the compliance manual itself, tailored to its business (portfolio management, trading and allocation, marketing, custody, books and records, privacy, code of ethics, business continuity, and so on), the CCO designation, and records that show the annual review happened.
The SEC's 2023 amendment that would have required the annual review to be documented in writing was vacated by the Fifth Circuit on June 5, 2024, so there is no rule text requiring a written review report; examiners still ask how the review was done and what changed as a result.
Who has to comply
Investment advisers registered or required to be registered with the SEC. State-registered advisers follow parallel state rules that are usually modeled on the same three elements.
What you have to write
Documents on this site that SEC 206(4)-7 requires or expects, each with who must have it, the review cycle and the obligations that cite it.
- RIA Compliance Manual Financial
- Investment Adviser Code of Ethics Financial
What the assessor asks to see
Examiners typically request the compliance manual and code of ethics with revision history, the CCO designation and reporting line, evidence of the most recent annual review and any changes made, Form ADV and marketing materials, trading and allocation records, custody and fee billing records, personal trading reports, business continuity plan, cybersecurity policies, vendor oversight records, books and records under Rule 204-2, and training records.
Where the requirement sits: Rule 206(4)-7(a)-(c); Rule 204A-1(a)(5) written acknowledgment of receipt; Rule 204-2(a)(17) records of policies and annual review
2024 vacatur
The SEC's August 2023 Private Fund Adviser Rules included an amendment to Rule 206(4)-7 requiring written documentation of the annual review. On June 5, 2024 the Fifth Circuit vacated those rules in full, including that amendment, so the rule text reverted to the original three requirements. The SEC's own notice confirms the vacated amendments are not in effect.
What AllyMatter does here
Controls the compliance manual and code of ethics, runs the annual review cycle, and produces the 204A-1 written-acknowledgment record for every supervised person.
AllyMatter publishes this site.
Assessors
Who assesses SEC 206(4)-7
SEC Division of Examinations staff conduct examinations; state securities regulators examine state-registered advisers. There is no certification or third-party audit requirement.
No firm has claimed a SEC 206(4)-7 assessor listing yet. Claim yours →
Consultants
Who helps with SEC 206(4)-7
A large ecosystem of RIA compliance consultants, outsourced and fractional CCO providers, and securities law firms. Common engagements are the annual compliance review, a mock SEC exam, manual rewrites after new rules (for example the Marketing Rule), and registration support.
Firms that name this framework in their own material. Listings we have not verified yet come from public filings and partner lists. Each firm can confirm its own.
No firm has claimed a SEC 206(4)-7 consultant listing yet. Claim yours →
Software
Tools for SEC 206(4)-7
Tools that name this framework in their own material.
Related reading
- Guide to Documenting the Annual Compliance ReviewTraces what the compliance rule requires of an adviser's annual review, and why the written-documentation amendment was vacated in court.Kitces.com
- Strengthening Your Compliance Program Through Effective Annual Compliance Reviews Under Rule 206(4)-7Step-by-step method for a risk-based annual review, and what examiners look for beyond a box-ticking file.Waystone Compliance
Independent third-party explainers, chosen by hand. Not affiliated with this site and not paid placements. All links are nofollow.
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From the publisher
Run the Policy Side of SEC 206(4)-7 in AllyMatter
Approve the policies SEC 206(4)-7 asks for, keep every version, and record a named acknowledgment from each person who has to read them.