The Custody Rule Clarified (Again)
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- The staff of the SEC’s Division of Investment Management recently provided additional guidance under the Advisers Act Custody Rule that addressed three situations where there have been significant questions as to whether an investment adviser has custody of client assets.
- This guidance illustrates the complexity of the Custody Rule and the need for a registered investment adviser to take steps to assure that it complies with the Custody Rule—including recognizing those situations where it has custody.
- Advisers should review this guidance (particularly in connection with undertaking their annual compliance review) to determine whether the situations identified by the SEC staff apply to them and take steps to address the new guidance.