Source: https://www.ria-compliance-consultants.com/category/custody/?mode=grid
Timestamp: 2020-05-30 14:18:56
Document Index: 93295861

Matched Legal Cases: ['art 1', 'art 1', 'art 1', 'art 3', 'art 3', 'art 3']

Custody Archives - RIA Compliance Consultants
Does your federally registered investment adviser firm have authority to initiate first-party transfers between the client’s accounts at different qualified custodians?
Indiana Securities Commissioner Provides Relief to Investment Advisers from an Annual Surprise Verification Custody Audit Due to Standing Letter of Authorizations
The Indiana Securities Commissioner recently published a new Statement of Policy regarding custody requirements for investment adviser firms registered in Indiana.
In February 2017, the Division of Investment Management of the U.S. Securities and Exchange Commission (“SEC”) issued a Guidance Update “Inadvertent Custody: Advisory Contract Versus Custodial Contract Authority.” In this Guidance Update, the SEC explained that an investment adviser may have custody of client funds or securities because of provisions in a custodial agreement entered into by the investment advisory client and a qualified custodian.
Fee Deduction = Custody for Registered Investment Advisers
Under Rule 206(4)-2 of the Investment Advisers Act of 1940 (“Investment Advisers Act”), custody means “holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.” An investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) will be deemed to have custody of a client’s assets if it meets this definition or if a related person of the investment adviser holds, directly or indirectly, client funds or securities, or has any authority to obtain possession of them, in connection with advisory services the investment adviser provides to clients. Examples of custody include: “possession of client funds or securities (but not of checks drawn by clients and made payable to third parties) unless you receive them inadvertently and you return them to the sender promptly but in any case within three business days of receiving them; any arrangement (including a general power of attorney) under which [the investment adviser] is authorized or permitted to withdraw client funds or securities maintained with a custodian upon [the investment adviser’s] instruction to the custodian; and any capacity (such as general partner of a limited partnership, managing member of a limited liability company or comparable position for another type of pooled investment vehicle, or trustee of a trust) that gives [the investment adviser] or [its] supervised persons legal ownership of or access to client funds or securities.”
Understanding Activities not Commonly Recognized as Custody
On March 4, 2013, the U.S. Securities and Exchange Commission (“SEC”), by the Office of Compliance Inspections and Examinations issued a risk alert that discusses deficiencies involving investment advisers and custody. As stated in the risk alert, “One of the most critical rules under the Investment Advisers Act of 1940 is the custody rule, which is designed to protect advisory clients from the misuse or misappropriation of their funds and securities. Yet, the SEC’s National Examination Program (“NEP”) has observed widespread and varied non-compliance with elements of the custody rule.”
Risk Alert Issued by SEC Identifies Significant Deficiencies Involving Failure of Investment Advisers to Comply with the Custody Rule
In a Risk Alert issued March 4, 2013 by the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”), it was revealed that “the SEC’s National Examination Program (“NEP”) has observed widespread and varied non-compliance with elements of the custody rule.” Rule 206(4)-2 under the Investment Advisers Act of 1940 (“Investment Advisers Act”), states that an investment adviser has custody of client assets if it or its related person holds, directly or indirectly, client funds or securities or has any authority to obtain possession of them. The Risk Alert indicated that approximately one-third (over 140) of the recent examinations reviewed by the SEC’s National Examination Program staff included custody related issues. The Risk Alert was issued by the SEC’s Office of Compliance Inspections and Examinations to encourage registered investment advisers to review their policies and procedures and examine their practices related to the deficiencies noted in the Risk Alert to ensure that investment advisers are aware of “…their responsibilities under the custody rule to protect client assets.”
Form ADV Part 1 Custody Changes
As part of CRD/IARD Software Release 2010.4 (click here to access the release), the United States Securities and Exchange Commission (“SEC”) announced changes to the custody questions listed on Form ADV Part 1. Specifically, the following changes have been made to Item 9 of Form ADV Part 1:
SEC Update FAQs of New Custody Rule
The Division of Investment Management of U.S. Securities and Exchange Commission (“SEC”) recently updated “Staff Responses to Questions About the Custody Rule.” (For a link to Staff Responses click here). In the updated responses, the Division provided new guidance concerning a variety of issues related to the custody rule. Two important issues discussed by the SEC clarify an investment adviser’s ability to request checks from a client account and situations where an investment adviser has online access to client pension accounts through the client’s ID number and password.
Fee Billing Best Practices with Bridge Financial Technology
RIA Compliance Connection 2020 is Going Virtual – Registration Now Open
Drafting Tips for ADV Part 3/Form CRS
Colorado Provides Investment Advisers with Guidance on Disclosing PPP Loans
North Carolina Provides Guidance to an Investment Adviser About a PPP Loan
NASAA Proposed Investment Adviser Representative Continuing Education Rule
Oklahoma Requiring Submission of Form ADV Part 3/Form CRS
Drafting Tips for an SEC Investment Adviser’s Form CRS/Form ADV Part 3
SEC Provides Investment Advisers Guidance on Disclosure of PPP Loan
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