SEC Considering Rules Requiring Surprise CPA Exams and Third-Party Compliance Audits for Registered Investment Advisers

April 27, 2009

In a speech today, Mary L. Schapiro, Chairman of the U.S. Securities and Exchange Commission (“SEC”), announced that in response to the recent investment scams, the SEC will consider, in short order, a new proposal for strengthening the controls over investment advisers with custody of client funds and securities.

Ms. Schapiro explained “that this proposal will include a consideration of ‘surprise’ examinations by a certified public accountant, and a requirement that investment advisers undergo third-party compliance audits.” Unfortunately, she did not clarify whether custody due solely to automatic fee deduction would trigger the requirement of a third-party compliance audit.

Additionally, Ms. Schapiro noted that she has requested that the SEC draft a rule requiring a senior officer of an investment advisor with custody to “certify that controls are in place to protect investor assets.”

Once the actual text of these proposed rules are released by the SEC, RIA Compliance Consultants will provide its readers with more details and analysis. Stay tuned.

Posted by Bryan Hill
Labels: Custody, SEC