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Navigating the Custody Rule: A guide for investment advisers
Journal of Securities Operations & Custody,
13
(3),
243-252
(2021)
Abstract
This paper focuses on prominent issues surrounding the Custody Rule (Rule 206(4)-2) of the Investment Advisers Act of 1940. The Custody Rule has recently raised several issues for Securities and Exchange Commission (SEC)- registered investment advisers as they try to navigate through new markets and new industry practices. As such, this paper addresses the SEC’s recent guidance regarding custody with respect to standing letters of authorisation, asset transfers between client accounts, inadvertent custody, access to client log-in information, trustee relationships, the COVID-19 pandemic and non-delivery versus payment (DVP) transfer arrangements.
Keywords: custodian; Custody Rule; investment advisers; SEC; compliance; guidance
The full article is available to subscribers to the journal.
Author's Biography
William Nelson JD, LLM, is Assistant General Counsel, Certified Financial Planner Board of Standards, Inc and responsible for assisting with the development of standards, including CFP Board’s Code of Ethics and Standards of Conduct and Procedural Rules; providing assistance with the adjudication of alleged violations of the code and standards; and providing assistance with corporate governance matters. Prior to joining CFP Board, William served as Chief Compliance Officer for Mercer Advisors, one of the largest independent Securities and Exchange Commission (SEC)-registered investment advisers. In this role, William redesigned the firm’s entire compliance programme. William served as Legal Adviser to Mercer Global Advisors’ Investment Committee and ERISA Committee and served as a subject matter expert for the organisation on questions concerning regulatory compliance. Prior to joining Mercer Advisors, he served as the Public Policy Counsel for CFP Board. William has held multiple roles as an attorney with both the Department of Justice and the Department of Veterans Affairs. For seven years, he also served as an Adjunct Professor at the George Washington University Law School where he taught Legal Research and Writing and is currently an Adjunct Professor at the University of Denver, Sturm College of Law, where he teaches Securities Law. William has been published in several scholarly law journals across the country, and his work has been cited in state and federal court decisions. William received his undergraduate degree from the University of Tulsa, his Juris Doctorate (JD) degree, with Honours, from the University of Tulsa, College of Law, and his Master of Laws (LLM) degree from the George Washington University Law School.
Bradley Ecker is a third-year law student at the University of Denver, Sturm College of Law. His focus areas include securities law, financial markets and corporate law. Throughout his time in law school, he has written on a variety of securities and corporate law issues including ESG investing, SEC rule updates, Federal Reserve penalties and securities fraud.
