Commissioner Invites Comments On Adopting New Custody Rule

Investment advisers frequently have custody, either directly or indirectly, of their clients assets. Obviously, custody of another’s assets can lead to infidelity. In the word’s of the satirist Juvenal, the question necessarily becomes “sed quis custodiet ipsos custodes? (but who shall guard the guards?).

In the case of registered investment advisers, securities regulators are the guards. Unfortunately, these guards have not always been effective.

In 2000, the North American Securities Administrators Association (NASAA) adopted a model custody rule. NASAA amended the rule in 2004 and 2005. The current version of NASAA’s model rule can be read here.

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Published In: Administrative Agency Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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