Oyster Consulting Blog

When complying with the financial world’s ever-increasing regulation, one requirement causes compliance headaches for many firms: determining the value of your assets. 

While traditional investments are reasonably straightforward, pricing illiquid and hard-to-value securities can feel more like a guessing game — and the process can be much more challenging for some businesses than others. For instance, how do you price:

• Mortgage-backed securities? 
• Structured products? 
• REITs? 
• Athletic teams? 
• Highly specialized (and occasionally classified) equipment? 

And the list goes on …

In fact, the topic is so charged and heavily questioned that the 2012 FINRA Annual Financial Regulations Letter addressing the detail opens by saying this issue “continues to raise concerns.” So, creating accurate pricing is absolutely essential. If your firm is a broker-dealer and has non-traded or illiquid assets, FINRA wants to see your valuation processes and procedures  — regardless of whether those assets are in a client’s account, part of your inventory or held as collateral. 

FINRA isn’t the only one concerned with valuation. At Oyster Consulting, we are working with many investment advisors who need support accurately and consistently valuing their assets —from private fund advisors that are now required to register with the SEC to real estate and hedge funds who want to mitigate their regulatory risks. Our consultants have the experience and understanding to address a wide range of illiquid and hard-to-value securities, and we are here to help protect you. 

If you have questions about how your non-traded assets are priced or just want to ensure you’ve adequately documented your processes and choices, email me or call me at 804.965.5403. I may not always be by my phone, but I will always call you back. 

This year, the SEC has a new Valentine’s Day gift for Private Fund Advisors: Your Form ADV Parts 1 and 2 are due. Thanks to Dodd-Frank [and Madoff fallout], many firms that previously could avoid registering with the SEC through the Investment Advisers Act of 1940’s “private adviser” exemption will no longer enjoy this immunity. Now, most private fund advisors with at least $150 million assets under management must register by March 30, 2012 — and file their Form ADV by February 14 to allow proper processing time. 

With only a few weeks before this due date, we know a lot of private fund advisors are scrambling to complete this process for the first time, but it’s not too late to find help. If you aren’t finished — or are concerned about mistakes and omissions — Oyster Consulting can work with you to:

• Interview your leaders. 
• Craft your responses to ADV part 1.
• Create your ADV part 2.  
• Draft policies, procedures and a code of ethics.
• Complete the registration process.
• Prepare for a visit from the SEC.

Oyster’s consultants are diligent, experienced guides who can help you comply with this new regulatory change for private fund advisors — but we aren’t miracle workers. So, we ask that any interested firms contact us by January 31, to allow adequate time to thoroughly support you. 

Even if you prefer to prepare for these new requirements alone, don’t hesitate to call me at 804.965.5403 with any questions or concerns. I might not always be by my phone, but I will always call you back.