Friday, March 12, 2010

Curtis Client Alert: Amended Custody and Recordkeeping Rules Effective March 12, 2010

As of today, all investment advisers registered with the SEC must comply with amended rules 206(4)-2 (the “Custody Rule”) and 204-2 (the “Recordkeeping Rule” and, together with the Custody Rule, the “Rules”) under the Investment Advisers Act of 1940. The amendments, which were adopted on December 30, 2009, are designed to provide additional safeguards when a registered adviser has custody of client funds or securities. In this Client Alert we discuss the newly introduced requirements under the amended Rules and applicable exceptions, with a particular focus on their implications for advisers to investment funds.

In related news, on March 10, 2010, the SEC updated its Division of Investment Management staff responses to questions about the Custody Rule.