What Is a Code of Ethics for RIAs?
The SEC’s Code of Ethics rule requires advisers to establish standards reflecting the firm’s fiduciary obligations, procedures for access persons to report personal securities holdings and transactions, requirements to obtain pre-approval for certain investments (like IPOs and private placements), and a process for reporting Code of Ethics violations internally. The code must be distributed to all supervised persons, who are required to acknowledge receipt and understanding, typically on an annual basis.
Firms are also required to keep records of Code of Ethics violations and any actions taken in response, which examiners frequently review to assess whether the code is genuinely enforced rather than just distributed.