Custody Rule(s)! Ensure Your Compliance When You Hold Client Securities

After some high-profile scandals involving the misappropriation of client assets, the U.S. Securities and Exchange Commission (SEC) has taken significant steps to enhance the safekeeping of client funds and securities by investment advisers including adopting Rule 206(4)-2 under the Investment Advisers Act of 1940, otherwise known as the Custody Rule. Among other things, the Custody Rule mandates that registered investment advisers with custody of client funds and securities adopt specific measures designed to facilitate the tracking and protection of client assets. As a result, attorneys advising investment adviser clients must understand the intricacies of the Custody Rule to help their clients mitigate regulatory risk.

READ NOW »

Related Content

• Regulation of Custodial Practices under the Investment Advisers Act of 1940, Rule 206(4)-2
  Read this comprehensive outline of custodial practice regulation from a former Deputy Director of the SEC’s division of Investment Management.

• Investment Adviser Compliance Policies and Procedures Checklist
  Consult this checklist to understand custody’s role in an investment adviser’s overall compliance program—a handy way to review your (or your clients’) compliance policies for completeness.

• Custody Agreement (Hedge Fund) (Custodian)
  Review the provisions in this template agreement, containing valuable guidance and drafting notes to assist you in understanding and negotiating important terms when a form custody agreement is not already provided by a fund custodian (or even when one is!).

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account. 

• Ukraine Invasion Resource Kit
• The Practical Guidance Journal Spring 2022 Edition features guidance for employers on COVID-19 vaccination, testing, and employee health data protection; climate change disclosure market trends; and updates related to the Secured Overnight Financing Rate (SOFR).
• Check out the Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 21 practice areas, and find out how you can Become a Practical Guidance Author.  

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+