Fund managers are not just required to have compliance programs; the so-called “compliance rule” – Rule 206(4)‑7 under the Investment Advisers Act of 1940 (Advisers Act) – requires them to have written policies and procedures that are “reasonably designed” to prevent violations of the Advisers Act and the SEC’s rules. The SEC has stressed that, to fulfill that requirement, managers must tailor their compliance programs to their specific businesses. Thus, relying on off-the-shelf compliance programs and manuals that do not address a manager’s individual risks, processes and operations is insufficient to satisfy the compliance rule. Tailoring a compliance program appropriately, however, can be a challenging task that requires considering various factors. This three-part series delves into the logistics of tailoring a fund manager’s compliance program. This second article lays out what fund managers should consider when tailoring their programs, including the role of an off-the-shelf compliance program. The first article outlined the expectations of the SEC, DOJ and investors as to the customization of compliance programs, as well as the consequences of failing to tailor the program. The third article will identify five triggers for a review – and possible update – of a manager’s compliance program. See our two-part coverage of the SEC’s risk alert on private funds: “Focus on Conflicts; Fees and Expenses; and MNPI” (Aug. 25, 2020); and “Key Takeaways for Managers” (Sep. 1, 2020).