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Custody Rules! Get in the Know and Add Value for Your Clients

January 10, 2021 (1 min read)

In the wake of numerous high-profile scandals involving the misappropriation of client assets, the U.S. Securities and Exchange Commission (the 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 (the “Advisers Act”), 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 enumerated 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.

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