Advisers Must Still Track Their Own Stock Trades Ethically
Published Date: 4/8/2025
Notice
Summary
The SEC is extending the paperwork rules for investment advisers to keep their ethics codes strong and transparent. This means advisers must keep track of their employees’ personal stock trades, get approvals for special investments like IPOs, and share their ethics rules with staff. It mostly affects SEC-registered investment advisers and keeps the same time and cost requirements as before.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 2 costs, 0 mixed.
Advisers must keep ethics paperwork
If you run an SEC-registered investment adviser, you must maintain a Code of Ethics and collect required information from staff under Rule 204A-1. The SEC estimates this imposes about 91 hours of burden per adviser annually (based on an average of 63 access persons), and there were 15,987 registered advisers, for a total estimated annual burden of 1,449,221 hours.
Staff must report trades and get approvals
If you are an 'access person' (a supervised staff member) at an SEC-registered investment adviser, you must report your personal securities transactions (including trades in any mutual fund managed by the adviser), obtain the adviser's approval before investing in an initial public offering (IPO) or a private placement, promptly report any code violations, and acknowledge receipt of the adviser's code of ethics.
Clients get ethics information from advisers
If you are an advisory client of an SEC-registered investment adviser, the Rule 204A-1 information collection is intended to provide you with information to evaluate your adviser's code of ethics. The purpose also supports the SEC's examinations to assess advisers' codes and supervised persons' trading activity.
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