US Securities and Exchange Commission suggests greater actions may be required under its custody rule

Steven M. Felsenthal and Frank Loffreno

Journal of Securities Operations & Custody, 2017, vol. 9, issue 4, 341-346

Abstract: Under US securities laws, investment advisers that maintain custody (as defined by applicable rules) must undergo certain procedures. The Securities and Exchange Commission (SEC) has taken violations of the custody rules quite seriously, often referring them for enforcement. This paper outlines two situations, based on SEC guidance, that may invoke the custody rule unexpectedly and with respect to which advisers should take proactive measures: transfers between client accounts (even those of the identical client) and possession of the power to move client assets. This paper suggests the steps an investment adviser must take in order to comply with this recent SEC guidance.

Keywords: custody; inadvertent; investment Advisers Act; anti-fraud; fraud (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jsoc00:y:2017:v:9:i:4:p:341-346

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