Download Our White Paper

By clicking submit, you are agreeing to our processing of your personal data under our Privacy Policy.

Does the Use of Alternative Data Require Alternative Compliance Measures?

Asset managers are more commonly using alternative data to source investment ideas, enhance both fundamental and so-called “quantamental” theses, and build or enhance quantitative models. But asset managers need to ensure they are in compliance with the SEC when obtaining and utilizing this data.

Alternative data, which is often characterized as non-traditional sources of investment research, continues to increase in utility. Regulators also appear to be increasing their interest in alternative data. Starting in the summer of 2019, ACA has observed SEC exam initial requests inquiring about processes and procedures for identifying, vetting, testing, implementing, and monitoring entities or individuals that provide investment research such as data aggregators, business exhaust data providers, survey sponsors, supply chain data providers, and flight tracking data resources. Alternative data was also officially named an examination priority in the SEC’s January 7, 2020 examination priorities for 2020.

This white paper will explore the many compliance concerns asset managers should keep in mind when obtaining and utilizing alternative data to ensure compliance with the SEC's Rule 206(4)-7 under the Investment Advisers Act, commonly known as "the Compliance Rule." 

This white paper covers the following topics:

  • Risk Assessment and Policy Development
  • Purchasing Third-Party Alternative Data
  • Building an Internal Data Mining Architecture
  • Ongoing Monitoring, Training and Testing