Rule 206(4)‑7 under the Investment Advisers Act of 1940 (Advisers Act) – the so‑called “compliance rule” – requires investment advisers to, among other things, adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the SEC’s rules. In other words, fund managers must have compliance programs. Moreover, the SEC has made it very clear that it expects those compliance programs to be specifically tailored to a manager’s business, including its strategy, structure and specific practices. Failing to customize the compliance program, such as by simply adopting an off-the-shelf program, can result in enforcement actions. For example, the SEC initiated enforcement actions against several hedge fund managers for failing to maintain policies and procedures tailored to the risks of their respective operations. Although the areas of deficiency in question vary widely, the respondents all found themselves in trouble for allegedly failing to maintain and enforce “reasonably designed” and appropriately tailored policies and procedures. To help readers adopt best practices and insulate themselves against similar enforcement actions, the HFLR interviewed legal professionals with expertise in regulatory enforcement matters. This article presents the insights from those interviews, along with former SEC Chair Jay Clayton’s thoughts on the matter. See our three-part series on tailoring a compliance program: “Why Fund Managers Should Customize” (Jul. 16, 2020); “What Fund Managers Should Consider” (Jul. 23, 2020); and “When Fund Managers Should Review and Update” (Jul. 30, 2020).