Post-Madoff Focus on Custody: Understanding the New Amendments to the SEC Custody Rule
March 4, 2010
1:00 PM – 3:00 PM EST
One of the many outgrowths of the Madoff debacle is the SEC's proactive focus on the safe and sound custody of client assets. Compliance with the safekeeping and other provisions of the Advisers Act custody rule, Rule 206(4)-2, will be front and center for SEC examiners in 2010, especially in light of the changes to the custody rule that were adopted by the Commission on December 30, 2009. The Adopting Release for the final rule amendments provides specific guidance regarding the types of internal controls that advisers should consider implementing with respect to the safekeeping of client assets. Examples include controls over the movement of client assets, testing the effectiveness of the firm’s controls over the safekeeping of client assets, and particular attention to the deduction of advisory fees directly from client accounts. SEC examiners will also be expecting that advisers conduct periodic reconciliation and asset verification and have policies and procedures in place to address how they will monitor qualified custodians and verify that client statements are being delivered.
Our expert speakers will discuss the specific provisions and mandated timelines set forth in the recent amendments to the custody rule (and the compliance implications for your firm), including the annual surprise examination for investment advisers, the internal control examination for advisers or certain related persons that are qualified custodians, and amendments to Form ADV that will require investment advisers to report more detailed information about custody practices.
The session will also cover such core elements of the rule as the definition of custody, use of qualified custodians and delivery of account statements, special new provisions for pooled investment vehicles and privately-offered securities, unintended custody and relevant SEC no-action relief, and controls to protect against personnel misappropriating client assets.
Learning Objectives:
- Understand the core elements of the new custody rule requirements and compliance timelines
- Learn how to avoid and address having unintended custody
- Understand the scope of an adviser’s duty in this area and what constitutes prudent best practices
- Determine appropriate policies and procedures
For Whom: Investment advisers, legal counsel, compliance professionals
Suggested Skill Level: Intermediate
Instructional Method: Group - Internet Based
Pre-requisites for participation: Attendees should have a basic understanding of the provisions and terminology contained within the Advisers Act of 1940
Continuing Education Credits: Recommended CPE Credit: 2
