Amendments to the Investment Advisers Act Custody Rule Will Impact Registered Timberland Investment Managers


In December 2009, the Securities and Exchange Commission (“SEC”) amended Rule 206(4)-2 (the “Custody Rule”) and related rules under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), to strengthen controls over the custody of client assets by registered investment advisers. Under the Custody Rule, a registered investment adviser must, in most cases, maintain client funds and securities with a “qualified custodian,” such as a bank or a registered broker-dealer. While the amendments to the Custody Rule and related provisions will impact all timberland investment managers (“TIMOs”) that are registered investment advisers under the Advisers Act, TIMOs that advise “separate account” clients on their timberland investments will be more significantly impacted by these amendments than TIMOs that advise only pooled investment funds.

Effect on Separate Account Business

The amendments require a TIMO that has custody of separate account client funds or securities (1) to undergo an annual surprise examination by an independent public accountant to verify client assets and (2) to have the qualified custodian maintaining the client funds or securities send account statements directly to the client.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Eversheds Sutherland (US) LLP | Attorney Advertising

Written by:


Eversheds Sutherland (US) LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.