The Bureau analyzes the responses to determine whether to conduct a more in-depth examination and to identify areas of concern or priority.
“Investor protection begins with prevention and the annual exam allows the Bureau to identify and address problematic business practices before investors are harmed,” said Attorney General Christopher S. Porrino. “The exam is a critical component of the Bureau’s comprehensive oversight of the financial services industry.”
New Jersey`s Uniform Securities Act and related regulations permit the Bureau to conduct both routine and for-cause examinations of investment advisers, as well as broker-dealers. These examinations can be either announced or unannounced.
Firms are required to provide responses to questions about their business activities, including portfolio composition, compliance with regulatory requirements, and customer complaints. The questions are updated each year to reflect changes in the investment adviser industry and the Bureau`s examination priorities.
“The information collected in the annual examination allows the Bureau to create risk profiles and ramp up oversight when necessary to protect investors,” said Steve Lee, Director of the New Jersey Division of Consumer Affairs. “The information also helps the Bureau identify industry trends as they are emerging and assess the risks they may pose to investors.”
One of the emerging trends emerging in 2017 is electronic investment advice. For the first time, firms are being queried about advice offered through so-called “robo-advisors.”
“The increase in financial technology and automation has made robo-advising a hot issue nationwide,” said Bureau Chief Christopher W. Gerold. “Our exam this year will indicate how prevalent automated investment advice is in New Jersey, how it’s being used, and what kind of risks it may have to investors in our state.”
The investment adviser examination can be accessed on the Bureau`s website at www.NJSecurities.gov, and must be completed by May 18, 2017.
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