Registered Investment Adviser Recordkeeping Requirements

August 28, 2013

Rule 204-2 (the “Books and Records Rule”) under the Investment Advisers Act of 1940 (“Investment Advisers Act”) requires investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) to make and keep true, accurate, and current certain books and records relating to its investment advisory business. Most books and records requirements for state registered investment advisers are the same as or similar to the SEC requirements, but each investment adviser needs to make sure that it is familiar with the requirements of the appropriate governing authority.  Generally, investment advisers will be required to maintain and preserve most books and records in an easily accessible location for five years from the end of the fiscal year during which the last entry was made on the record or, in the case or marketing pieces or other forms of communications, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated the document.  The most recent two years of the required books and records must be maintained in an appropriate office location of the investment adviser. Information must be provided on the Form ADV Part 1 if any of the investment adviser’s books and records are kept in a location other than the investment adviser’s principal office location.

Books and records will be reviewed during an SEC or state securities examination of the investment adviser. An investment adviser’s written policies and procedures should at a minimum address the what documents should be maintained, how the documents will be maintained, where the documents will be maintained, how long the documents will be maintained, and the individual(s) that will be responsible for ensuring the proper maintenance of required books and records. In order to ensure that it is prepared for an SEC or state securities regulatory examination, an investment adviser should periodically review and  test its written policies and procedures to make sure that they properly reflect and that the investment adviser is complying with the investment adviser’s SEC or state securities regulatory books and records requirements. An investment adviser should update its written supervisory policies and procedures related to the proper maintenance of required books and records to address any areas of deficiency identified or when there is a regulatory change that may affect the books and records the investment adviser is required to maintain.

For more information and guidance on maintaining the appropriate books and records for your registered investment adviser, RIA Compliance Consultants is hosting a free webinar, “Investment Adviser Books and Records Requirements,” on September 19, 2013, at 12:00pm CDT. Our consultants will not simply review Rule 204-2, but instead will provide an overview of the files, documents, and reports a regulator may request during an examination of an investment adviser. Our consultants will also discuss how long records should be maintained and will discuss the requirements for maintaining records electronically. To register for this event, click here.

Posted by Bryan Hill
Labels: Books Records, SEC, Webinar, Written Policies and Procedures