The North American Securities Administrators Association released an updated series of recommended best practices to help investment advisors improve their compliance practices and procedures.

“Our best practices were developed to help regulators and advisors better understand and meet compliance challenges,” said NASAA president and North Dakota Securities Commissioner Karen Tyler, in a release. “Advisors can use this information to help strengthen compliance programs and minimize the potential for regulatory violations. Strong compliance programs are an integral ingredient in building and maintaining investor confidence.”

Tyler said the best practices were developed after a series of coordinated examinations of investment advisors by 43 state and provincial securities examiners revealed a significant number of problem areas. Tyler said 418 examinations of investment advisors were conducted between January 1 and May 31. These exams revealed 2,135 deficiencies in 13 compliance areas.

Tyler noted that the 2007 examinations, conducted under the guidance of NASAA’s Investment Advisor Operations Project Group, found a 12% and 19% increase respectively in advisors with Registration and Books and Records deficiencies. A slight increase in advisors with Supervisory deficiencies was also noted. The number of advisors with custody deficiencies dropped by 6%.

The top five categories with the greatest number of deficiencies identified in the examinations involved registration, unethical business practices, books and records, supervisory/compliance, and privacy. Other areas with deficiencies included the preparation and maintenance of financial records, advertising, fees, custody, investment activities, solicitors, performance reporting and hedge funds.