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/lp/emerald-publishing/the-sec-provides-new-custody-rule-guidance-to-investment-advisers-h8A45c6n3I
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- Publisher
- Emerald Publishing
- Copyright
- © 2017 Chapman and Cutler LLP.
- ISSN
- 1528-5812
- DOI
- 10.1108/joic-04-2017-0021
- Publisher site
- See Article on Publisher Site
Abstract
To summarize guidance from the Securities and Exchange Commission’s (“SEC”) Division of Investment Management regarding Rule 206(4)-2 (the “Custody Rule”) under the Investment Advisers Act of 1940.Design/methodology/approachThis article summarizes the SEC’s guidance on “inadvertent custody” created by broad authority in custodial agreements, custody created by standing letters of instruction, and adviser authority to transfer funds or securities between two or more of a client's accounts.FindingsThis article concludes that firms should review their existing client custodial agreements, standing letters of instruction and other arrangements carefully to determine whether they have custody and whether additional action is necessary.Originality/valueThis article contains information on the Custody Rule and related SEC guidance from experienced securities and financial services regulatory lawyers.
Journal
Journal of Investment Compliance – Emerald Publishing
Published: Jul 3, 2017
Keywords: Investment advisers; US Securities and Exchange Commission (SEC); Investment Advisers Act of 1940; Securities; Custodial agreements; Custody Rule