Thursday, May 28, 2009

Industry Reaction to Proposed Custody Rule Amendments

As reported by InvestmentNews, the SEC proposal to amend the so-called Custody Rule under the Investment Advisers Act of 1940 to require surprise examinations of investment advisers who maintain custody of their clients' assets has been met with resistance by the financial advisory industry. Industry representatives including the Financial Planning Association (the "FPA"), the Investment Adviser Association (the "IAA") and the National Association of Personal Financial Advisors (the "NAPFA") have labelled the SEC proposal "misguided" and one that "would saddle advisers with unnecessary costs."

The FPA, IAA and NAPFA are expected to submit their comment letters on the proposal to the SEC by the July 28, 2009 deadline.