Who do we work for? Our client list is custom-tailored to the broad range of expertise we offer. Institutional money managers and large sell-side firms seek us out for our specialized offerings not found elsewhere. Clients include middle- and large-market SEC advisers, private fund advisers including hedge fund, private equity and fund of fund advisers (FOFs), insurance company affiliates, managers of managers and large indie firms with numerous branch offices.
Here are samples of the types of firms we work with, and what we do for them:
Education and Training
2018
Although it is technically not required under any specific SEC regulation, during an SEC exam, examiners ask for copies of all training materials provided to employees. The SEC expects firms to train employees on compliance requirements as part of Rule 206(4)-7 or Rule 38a-1 compliance. There is a specific training requirement for NFA registered firms.
All clients of FrontLine Compliance are encouraged to participate in our Annual Compliance Training Programs. We conduct the compliance training for the firm that meets the SEC and/or NFA’s expectations by focusing on employee requirements, ethics, and supervision of employees.
Regulatory Response Services
2016-2017
Several of our long-term clients underwent routine regulatory examinations in 2016 and 2017. These were both SEC and NFA exams. Most of the clients were regular participants in our Quarterly Forensic Testing Program which made for a very smooth exam process with minimal deficiencies.
However, in one case, the project began unexpectedly.
Case Study: An SEC registered venture capital firm found itself under regulatory scrutiny as part of the SEC’s targeted Custody Exams. It’s CCO had recently transitioned and the firm needed help; the new CCO came to us via a referral from another client. Together, we worked to bring the firm’s custodial practices into compliance and responded effectively to the Custody Exam.
Then, just a few months later, the SEC began a full scope routine exam. Between exams, FrontLine Compliance performed a GAP Analysis of the compliance program and many corrective measures were in process. However, many were as of yet still incomplete at the start of the second exam.
Again, we worked with the firm throughout the examination and guided the responses to requests to ensure a successful outcome. The exam went very smoothly, just 6 months, and the firm even received a phone call stating the “exam was over” and the examiners thanked the firm for providing such a detailed outline to the compliance manual changes and updates (FrontLine created).
Typically, firms do not know when an exam is over (officially) and certainly don’t get thanked by an examiner. This is a prime example of FrontLine’s regulatory response effectiveness.
Annual Compliance Reviews
2015
FrontLine assisted the majority of its clients with their Annual Compliance Review. Our proven system of thorough testing combined with a comprehensive and cohesive written report was stress tested by regulators multiple times throughout the year. Our clients received positive comments back from regulators each time.
Case Study: A large indie firm client was to have its Annual Compliance Review conducted by its Internal Audit Department, but found out just two weeks before the report was due that the Internal Audit team could not complete the task. FrontLine was hired to pick up the slack and complete the review, including all testing, in less than two weeks. Even with the short time allotted, FrontLine consultants performed an onsite GAP analysis, conducted the forensic testing, and created a comprehensive written report for the Board of Directors. All on time and under budget!
SEC Exam Prep
2014
FrontLine Compliance helped many hedge funds and private equity firms of various sizes face their first SEC exam in 2014—either one of the new “Presence Exams” or full-scope reviews. We worked with these firms to ensure that all documents produced were accurate, responsive, and contained no “red flags.” Our mock exam and mock interviews were utilized to successfully prep the firms. In one case, the SEC visit lasted less than three days and resulted in no findings whatsoever. No client had any material findings. Just as we planned!
Forensic Testing Program – A Client’s Commentary
2011-2014
“The forensic testing program is a crucial resource; it can be a real challenge for a CCO to know what constitutes good testing and even, in some cases, how to do it. Being able to rely on real experts in the field gives me a lot of confidence in facing an exam as well as in the strength of our program and conducting our annual review; it also allows much more thorough testing and documentation than I would have been able to complete with the time and resources I have available. I do learn from our results—FrontLine offers guidance on areas where my knowledge is weaker and sometimes has, through feedback, updated me both on what the SEC seeks and on market and industry practice. So FrontLine offers both knowledge and solutions!”
– General Counsel and CCO, Hedge Fund Client
Strategic Consulting
2012-2013
A large indie firm hired FrontLine Compliance to bridge the strategic gap between its business line managers and its compliance. The business side had important goals to expand third-party relationships, launch new products and acquire additional firms. But compliance wasn’t on board because of unanswered questions. With the two sides bogged down, they called us to help them navigate through the impasse. Working closely with both sides, we ironed out differences to bring them together in a way that made each side comfortable in moving forward with a unified plan.
Mock SEC Exam – Regulatory Consulting
2011
FrontLine Compliance was hired to evaluate the compliance program of a multi-billion dollar hedge fund adviser after an affiliate was charged with a SEC enforcement action. We recommended they perform an SEC mock audit of the firm. Within months of completing our review, the SEC actually audited the firm. After three days on-site, the SEC had uncovered no significant findings. The firm was prepared thanks to our work.
