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Abstract
Nearly six years have passed since the US Securities and Exchange Commission (SEC) adopted a series of compliance rules designed to formalize compliance programs in the investment management industry Rule 38a-1 under the Investment Company Act of 1940 and Rule 206(4)-7 under the Investment Advisers Act of 1940 codified the need for investment companies and investment advisers to appoint a Chief Compliance Officer, adopt compliance policies and procedures and conduct an annual review. In the wake of the most recent financial crisis, the SEC, the Financial Industry Regulatory Authority (FINRA) and all other regulators vow to be more diligent enforcers of the federal securities laws. A series of rules initiated for FINRA-registered firms have the goal of formalizing compliance and supervisory controls in the brokerage industry. FINRA Rule 3130 requires substantial and purposeful interaction between business managers and compliance officers throughout the firm. Compliance departments of the 21st century are no longer "cost-centers" but they are a cost of doing business in the securities arena.