Who may be interested: Investment Advisers.

Quick Take: The SEC recently reopened the comment period for proposed rule changes that would amend and redesignate Rule 206(4)-2 under the Advisers Act (the “Current Custody Rule”), which governs how registered investment advisers handle and maintain client securities and funds. The amendments originally proposed on February 15, 2023 would significantly alter the Current Custody Rule and redesignate it as new Rule 223-1 under the Advisers Act (the “Safeguarding Rule”). The SEC is reopening the comment period to allow interested persons to review the proposed amendments to the Current Custody Rule’s audit provision in light of the recent adoption of the private fund adviser audit rule, which generally requires an adviser to obtain an annual financial statement audit of each private fund it advises in accordance with the audit provision of the Current Custody Rule. The comment period will remain open for 60 days after the publication of the reopening release in the Federal Register.

The press release can be found here.

See S&K’s blog post covering the proposal here.