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.
To read the full PDF article, click here.