Investment Adviser Newsletter - Proposed Amendments to Custody Rule


The fallout from the Bernard Madoff scandal continues. On May 14, 2009, the Securities and Exchange Commission (“SEC”) proposed additional safeguards designed to minimize the potential for abuse of client funds by investment advisers with custody. Typically, advisers do not have physical custody but are deemed to have custody if they have the authority to withdraw client funds held by the qualified custodian or if they are affiliated with the qualified custodian. The proposed amendments are summarized below. The SEC is requesting comments by July 28, 2009.

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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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