SEC Backing Off Proposal to Require Third-Party Compliance Audits
According to a recent article in Investment News which quotes an official of the Financial Planning Association ("FPA"), the chairman of the U.S. Securities and Exchange Commission ("SEC"), Mary Schapiro, is backing off of her previously discussed, but never formerly considered by the SEC, proposal to require each federally registered investment adviser to engage a third-party to conduct an annual compliance audit of the investment adviser.
Based upon recent public comments by several other SEC commissioners during the past month, this report isn't surprising. The fact that the third-party compliance audit requirement was not included with the SEC's recently proposed surprise audit and SAS 70 Type II audit requirement was a telltale sign that there wasn't a consensus among SEC commissioners for this approach.
Of course, this leads to the question of what, if any, additional reform efforts will the SEC support with respect to registered investment advisers. As the SEC's position become clearer, RIA Compliance Consultants will keep its readers of these developments.
Based upon recent public comments by several other SEC commissioners during the past month, this report isn't surprising. The fact that the third-party compliance audit requirement was not included with the SEC's recently proposed surprise audit and SAS 70 Type II audit requirement was a telltale sign that there wasn't a consensus among SEC commissioners for this approach.
Of course, this leads to the question of what, if any, additional reform efforts will the SEC support with respect to registered investment advisers. As the SEC's position become clearer, RIA Compliance Consultants will keep its readers of these developments.
Labels: Custody, SEC, Third-Party Compliance Audit
posted by bhill at 2:00 PM
SEC Will Consider at May 14 Meeting Whether to Propose Amendments to Rule 206(4)-2 Requiring Audits of Investment Advisers with Custody
The Securities and Exchange Commission ("SEC") has announced that the Commission will consider whether to propose amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940 during its open meeting scheduled for Thursday, May 14, 2009.
The agenda posted for this SEC open meeting explains that "[t]he proposed amendments would enhance the protections provided advisory clients when they entrust their funds and securities to an investment adviser. If adopted, the amendments would require investment advisers having custody of client funds and securities to obtain a surprise examination by an independent public accountant, and, unless the client assets are maintained with an independent custodian, obtain a review of custodial controls from an independent public accountant."
There is no reference in the posted agenda to the previously discussed requirement of a third-party compliance audit of the registered investment adviser or a requirement that a registered investment adviser's senior executive certify annually the adequacy of the investment adviser's internal controls. Of particular interest to many registered investment advisers is whether any proposed audit requirement for registered investment advisers will apply to those registered investment advisers that have custody solely due to automatic fee-deduction.
Following the SEC's open meeting on May 14, 2009, RIA Compliance Consultants will provide readers with more details of any proposed amendments to the custody rules for registered investment advisers.
The agenda posted for this SEC open meeting explains that "[t]he proposed amendments would enhance the protections provided advisory clients when they entrust their funds and securities to an investment adviser. If adopted, the amendments would require investment advisers having custody of client funds and securities to obtain a surprise examination by an independent public accountant, and, unless the client assets are maintained with an independent custodian, obtain a review of custodial controls from an independent public accountant."
There is no reference in the posted agenda to the previously discussed requirement of a third-party compliance audit of the registered investment adviser or a requirement that a registered investment adviser's senior executive certify annually the adequacy of the investment adviser's internal controls. Of particular interest to many registered investment advisers is whether any proposed audit requirement for registered investment advisers will apply to those registered investment advisers that have custody solely due to automatic fee-deduction.
Following the SEC's open meeting on May 14, 2009, RIA Compliance Consultants will provide readers with more details of any proposed amendments to the custody rules for registered investment advisers.
Labels: Custody, SEC, Third-Party Compliance Audit
posted by bhill at 11:00 AM
SEC Will Consider This Week: New Controls for Registered Investment Advisers with Custody
In a speech to the Investment Company Institute last week, the Chairman of the U.S. Securities and Exchange Commission ("SEC"), Mary Schapiro, noted that "[n]ext week [the SEC] will consider rule proposals for significant enhancements to controls around investment adviser custody of customer assets, to reduce dramatically the possibility that frauds like Madoff might happen again at a registered broker-dealer or investment adviser."
Based upon this speech and other public comments by SEC Chairman Schapiro, RIA Compliance Consultants presumes that the SEC will be considering this week proposals to require registered investment advisers to undergo a surprise audit as to custody of client assets, to complete a third-party compliance audit, and to certify through a senior executive the adequacy of the registered investment adviser's internal controls.
Once the SEC announces these proposed investment adviser rules, RIA Compliance Consultants will provide a detailed analysis to its readers.
Based upon this speech and other public comments by SEC Chairman Schapiro, RIA Compliance Consultants presumes that the SEC will be considering this week proposals to require registered investment advisers to undergo a surprise audit as to custody of client assets, to complete a third-party compliance audit, and to certify through a senior executive the adequacy of the registered investment adviser's internal controls.
Once the SEC announces these proposed investment adviser rules, RIA Compliance Consultants will provide a detailed analysis to its readers.
Labels: Custody, SEC, Third-Party Compliance Audit
posted by bhill at 8:21 PM
