Compliance essentials for every team member

Compliance isn't a department you visit once a year — it's a set of daily behaviors that protect our clients, our firm, and your career. An SEC exam can happen at any time, and when it does, the examiners look at everyone's records, not just the compliance officer's.

The regulatory framework

Minerva is registered with the SEC under the Investment Advisers Act of 1940. This means we're subject to:

• SEC examinations — Routine (every 3–5 years) or for-cause inspections where SEC staff review our books, records, and practices
• Form ADV — Our public disclosure document, filed annually, describing our services, fees, conflicts of interest, and disciplinary history. Clients receive Part 2A (the "brochure") before or at the time of engagement.
• Code of Ethics — Our internal document governing personal trading, gifts, outside business activities, and conflicts of interest. Every employee must acknowledge it annually.

Personal trading rules

As an employee of an RIA, your personal investment activity is restricted:

Pre-clearance required: Before buying or selling any individual security (stocks, bonds, options), you must submit a pre-clearance request to the compliance officer. Pre-clearance is valid for 24 hours.

Exempt from pre-clearance: Broad-market index funds, mutual funds, ETFs, and government securities do not require pre-clearance. These are the same investments we recommend to clients, and trading them does not create a conflict.

Blackout periods: You cannot trade a security within 7 days before or after the firm trades that security for clients. This prevents front-running (buying before client orders drive the price up).

Reporting: You must provide the compliance officer with:

• Initial holdings report (within 10 days of joining)
• Annual holdings report (every January)
• Quarterly transaction report (within 30 days of quarter-end)

Consequences: Personal trading violations are reported to the SEC and can result in termination, fines, and industry bars. This is not theoretical — the SEC actively enforces these rules.

Recordkeeping requirements

The SEC requires RIAs to maintain books and records for a minimum of 5 years (some records for longer). What this means in practice:

All client communications must be retained:

• Emails (automatically archived by our email system)
• Meeting notes (documented in the CRM within 48 hours)
• Phone call summaries (logged in the CRM if investment advice was discussed)
• Letters and physical documents (scanned and filed in the client's Drive folder)

Never use unapproved channels for client business:

• No personal email (Gmail, Yahoo, Outlook personal)
• No personal cell phone text messages about investment matters
• No unapproved messaging apps (WhatsApp, Signal, iMessage for business)
• All client communication must flow through firm-approved channels that are archived

This isn't bureaucratic paranoia — it's federal law. The SEC has fined major firms hundreds of millions of dollars for "off-channel communications" violations.

The three most common violations

1. Inadequate recordkeeping

Missing meeting notes, undocumented trade rationales, incomplete client files. The SEC assumes that if it isn't documented, it didn't happen — and if it isn't documented, it didn't happen properly.

2. Personal trading violations

Front-running, failure to pre-clear, failure to file quarterly reports. These are easy to prevent and catastrophic when they occur.

3. Misleading marketing

Performance claims without proper disclosures, cherry-picked results, testimonials without required disclaimers. All marketing materials must be pre-approved by compliance.

Your daily compliance responsibilities

1. Document everything. If you discussed investment advice with a client — in a meeting, on a call, in an email — document it in the CRM.
2. Use approved channels only. No personal email, no text messages about investments, no unapproved apps.
3. Pre-clear personal trades. If it's an individual security, get pre-clearance before you trade.
4. Report concerns. If you see something that doesn't look right — a colleague discussing client data inappropriately, a trade that seems unusual, a communication channel that might not be archived — report it to the compliance officer. You will never be penalized for raising a concern in good faith.
5. Complete required training. Annual compliance training, Code of Ethics acknowledgment, and cybersecurity training are mandatory, not optional.

Key takeaways

1. Every team member's actions can trigger a compliance finding. This is everyone's responsibility, not just the compliance officer's.
2. Personal trading of individual securities requires pre-clearance. Index funds and mutual funds are exempt.
3. All client communications must go through approved, archived channels. Off-channel communications are a federal violation.
4. Document everything — if it isn't documented, the SEC considers it undone.
5. Report concerns in good faith. The firm protects whistleblowers and penalizes the behavior, not the reporter.

Glossary

• SEC (Securities and Exchange Commission) — The federal regulator that oversees investment advisors, broker-dealers, and securities markets.
• Form ADV — The disclosure document filed by RIAs with the SEC, describing services, fees, conflicts, and disciplinary history. Part 2A is given to clients.
• Code of Ethics — Internal firm document governing employee personal trading, gifts, outside activities, and conflicts of interest.
• Pre-clearance — The process of obtaining compliance officer approval before executing a personal trade in an individual security.
• Front-running — The illegal practice of trading a security for personal benefit based on knowledge of pending client orders.
• Off-channel communications — Client communications conducted through unapproved channels (personal email, text, messaging apps) that bypass the firm's archiving system.
• Blackout period — The 7-day window before and after a firm trade during which employees cannot trade the same security personally.