Custody Considerations for Investment Advisers

Apr. 2013


In March 2013, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert regarding compliance with Rule 206(4)-2 of the Investment Advisers Act of 1940 (“Custody Rule”)1. The Risk Alert provided a summary of the requirements of the Custody Rule and outlined a number of significant deficiencies found in recent exams of SEC registered investment advisers that were performed by OCIE. Such deficiencies included the failure of investment advisory firms to: (i) identify that they have custody; (ii) obtain required surprise examinations;2 (iii) ensure client assets are held with a qualified custodian; and/or (iv) comply with the audit approach for pooled investment vehicles.


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