Investment Adviser Custody Rule Causing Headaches for Advisers


The SEC is warning advisers that it is increasingly finding violations of the custody rule, which is designed to protect advisory clients from the misuse or misappropriation of their funds and securities. In fact, a review of recent examinations that contained significant deficiencies revealed that approximately one-third (over 140) included custody-related issues.

According to the SEC Risk Alert, the custody-related deficiencies can be grouped into four categories:

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