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US Securities and Exchange Commission suggests greater actions may be required under its custody rule

Author

Listed:
  • Felsenthal, Steven M.
  • Loffreno, Frank

Abstract

Under US securities laws, investment advisers that maintain custody (as defined by applicable rules) must undergo certain procedures. The Securities and Exchange Commission (SEC) has taken violations of the custody rules quite seriously, often referring them for enforcement. This paper outlines two situations, based on SEC guidance, that may invoke the custody rule unexpectedly and with respect to which advisers should take proactive measures: transfers between client accounts (even those of the identical client) and possession of the power to move client assets. This paper suggests the steps an investment adviser must take in order to comply with this recent SEC guidance.

Suggested Citation

  • Felsenthal, Steven M. & Loffreno, Frank, 2017. "US Securities and Exchange Commission suggests greater actions may be required under its custody rule," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 9(4), pages 341-346, September.
    • Handle: RePEc:aza:jsoc00:y:2017:v:9:i:4:p:341-346
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    More about this item

    Keywords

    custody; inadvertent; investment Advisers Act; anti-fraud; fraud;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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