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Thread: Compliance Program

  1. #1
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    Compliance Program

    Definition: Compliance is adhering to and demonstrating adherence to external laws and regulations as well as the policies and procedures of the pension plan.
    1. Does your organization have a compliance program? If your answer is yes, please respond to questions 2-4 below:
    2. How many years since the programís inception?
    3. Please provide information on how your organization implemented its compliance program; topics might include the following:
    a. What are the programís key roles and responsibilities, particularly in early years?
    b. How many positions were required to build the program in the first, second, third years? Are there any lessons learned (for example, start small and increase its scale over a four or five year period)
    c. Please provide the budget allocated each year.
    4. Please provide any best practices or lessons learned in implementing a compliance program.
    5. If your answer to Qt 1 is no, how does your organization address compliance issues?

    Art Martinez, Director, Financial Planning, Accounting & Reporting
    California State Teachers' Retirement System
    amartinez@CalSTRS.com | www.CalSTRS.com
    916-414-4307

  2. #2
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    Hi Art,
    We have investment compliance responsibilities within the investment dept. and overall system compliance in our Legal area. It has been this way for several years. We have one individual handling ďinvestmentĒ compliance including investment policy and procedural items and investment filings and I believe one individual in Legal. If you want further information about lessons learned, budget, resources, etc., itís probably best to chat on the phone or I can put you in touch with those individuals. Thanks,
    Lynn

    Lynn A. Hoover, CPA | Controller
    STRS Ohio
    275 East Broad Street, Columbus, Ohio 43215
    Office: (614) 227-2843 | Fax: (614) 744-3326
    HooverL@strsoh.org

  3. #3
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    Art,

    I reached out to our compliance officer here at INPRS and she gave me the following answers. If you have any more questions please feel free to reach out.

    1. Yes
    2. Since late 2013 roughly
    3. INPRS implemented itís compliance program slowly:
    a. Initial monitoring of Retained/Delegated duties from Indiana Code/Indiana Administrative Code
    b. Inserted compliance as a goal into the organizationís strategic plan
    c. 2015 grew program to encompass deep dive into Retained/Delegated and also Board Governance Manual, Investment Policy Statement, policies/procedures
    d. One person focused on compliance as 50% of duties in 2014, moved to one full-time compliance FTE in 2015.
    e. Lessons learned Ė understand what you must monitor and then begin to add additional pieces of evidence to support compliance throughout the organization; gain a big picture of how compliance impacts all functional areas; in addition to monitoring compliance, educate as to why compliance is necessary and important
    f. On fiscal year*:
    i. Year 1 = $8,925 ($4,125 SaaS subscription for education/training; $4,800 for professional training and certification);
    ii. Year 2 = $4,125 (SaaS subscription);
    iii. Year 3 = $2,916.
    4. The best thing one can do when trying to establish a compliance program is to attend a Basic Compliance & Ethics Academy through the Society for Corporate Compliance and Ethics and then attain his/her Certified Compliance and Ethics Professional (CCEP) designation. This elevates the importance of compliance and ethics as an autonomous function rather than something that falls under the legal or internal audit department. Additionally, a baseline survey should be conducted to determine the level of compliance/ethics knowledge within the organization and then frequent communication re: the purpose of a program, the importance to the organization and also staff, steps being taken to ensure compliance and how staff can help in achieving that goal.
    INPRS key roles/responsibilities in early years Ė monitor all aspects of compliance to ensure weíre meeting statutes and regulations; grow the program from only monitoring to education and training.

    *Does not include professional development (webinars) or membership dues.


    Thanks,


    STEPHEN TEPNER, CPA
    Senior Financial Analyst
    One North Capitol, Suite 001
    Indianapolis, IN 46204
    (317) 234-6613
    Stepner@inprs.in.gov

  4. #4
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    Hello Art,

    I was referred your questions related to compliance issues for ERS of Texas. I started a new role as the Investment Compliance Officer at ERS at the beginning of this year. Youíll see in my responses that while ERS currently maintains various compliance procedures, we are now conducting a full review of the compliance program and plan to implement major enhancements by 2019. Please let me know if you have specific questions I can address.

    Thanks and regards,

    Aaron Ismail
    Investment Compliance Officer
    (512) 867-7361
    EMPLOYEES RETIREMENT SYSTEM OF TEXAS


    1. Does your organization have a compliance program? If your answer is yes, please respond to questions 2-4 below:
    a. ERS is currently enhancing compliance policies and procedures already in place, and further developing its compliance program. ERS hired an Investment Compliance Officer (ICO) in January 2018. The ICO will work with internal groups develop such policies and procedures with the goal of implementing major elements of the program by Q1 2019.

    5. If your answer to Qt 1 is no, how does your organization address compliance issues?

    ERS currently utilizes a number of procedures to maintain compliance with its Investment Policy, Code of Ethics and Insider Trading Policy.
    ERS maintains a Code of Ethics and Personal Transaction Policy in which certain covered employees must submit their personal transaction activity to the ICO and receive pre-clearance for covered transactions. Compliance also reviews employee gifts and outside business activities for conflicts of interest.
    ERS uses automated pre and post trade checks through Bloomberg to monitor Fund transactions against portfolio compliance thresholds, including prohibited countries and restricted lists. Compliance receives daily emails from the custodian confirming all portfolio compliance tests are passing. Internal emails from operations are sent daily with tracking error data.
    The ICO also participates in Internal Investment Committees as a non-voting member to provide guidance on compliance of alternative investments within the ERS Funds.
    A report covering key areas of the compliance program (Securities Lending, Proxy Voting, Personal Trading, and Portfolio Compliance) is provided to the Board of Directors and exceptions/breaches are discussed. The ICO and other key staff are currently reviewing the Investment Policy and Code of Ethics for enhancements to its policies and procedures. The ICO will align the compliance program with industry best practices through interviewing pension consultants and other plans, monitoring regulatory guidance, and attending regulatory focused conferences.

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