What are the requirements for advisers who have custody of client funds and/or securities?
Advisers deemed to have custody of client funds and securities are subject to the following custodial requirements: (1) $35,000 minimum net worth requirement of CCR Rule 260.237.2, (2) Surprise verification requirement of CCR Rule 260.237(e), and (3) Audited financial statements requirement of CCR Rule 260.241.2. 31) I deduct advisory fees directly from the clients’ custodial accounts. Do I have custody of client funds and securities? If yes, are there any procedures I may follow to be exempted from the financial requirements and surprise verification? Yes and Yes. The Department takes the position that any arrangement under which the adviser is authorized or permitted to withdraw client funds or securities maintained with a custodian upon the adviser’s instruction to the custodian is deemed to have custody of client funds and securities. Safeguarding Procedures: The Department allows advisers who have this type of payment arrangement to be exempted from the requirements of: (1) $35,00
Related Questions
- If an adviser manages client assets that are not funds or securities, does the amended custody rule require the adviser to maintain these assets with a qualified custodian?
- What are the requirements for advisers who have custody of client funds and/or securities?
- How is custody of client funds or securities determined?
