On September 14, 2026, the SEC issued a Risk Alert (Alert) stating that the staff of the Division of Examinations had found widespread failures and omissions with regard to investment advisers’ compliance with Rule 206(4)‑7, the Compliance Rule (Rule), under the Investment Advisers Act of 1940, specifically those elements of the Rule on annual compliance reviews. The Alert describes numerous shortcomings on the part of advisers, ranging from failure to conduct timely annual compliance reviews at all to failure to maintain proper documentation of such reviews when they have been conducted. The Alert reaffirms the SEC’s view that good-faith compliance reviews that have not been properly documented fall far short of legal requirements, legal and compliance experts interviewed by the Hedge Fund Law Report agreed. This article summarizes the Alert and offers practical takeaways for investment advisers and their compliance personnel. See “Common Pitfalls and Best Practices When Performing Annual Compliance Reviews” (Dec. 18, 2025).