Kenneth Starr, an investment adviser representative, to several celebrities and other wealthy clients, was arrested on May 27th for allegedly using client funds for his own personal use. Starr has been charged in a New York District Court with fraud by an investment advisor, a wire fraud scheme to obtain property, money laundering, false statements in an IRS Filing, and false statements to a federal officer, for fraudulently misappropriating over $30 million of client funds. The Complaint also charges Andrew Stein, an associate of Starr’s, with various tax fraud violations. (Click here for the full Complaint).
Category Archives: Custody
Does your SEC registered investment adviser or its affiliate serve as an introducing broker-dealer or qualified custodian for investment advisory accounts? If so, are you aware of the new internal control report requirements of the U.S. Securities and Exchange Commission (“SEC”)?
Although the recent changes by the U.S. Securities and Exchange Commission (“SEC”) to the custody rule for federally registered investment advisers went into effect on March 12, 2010, it appears that many investment advisers mistakenly assume they don’t have custody, misinterpret the definition of custody or believe they are somehow exempt from the custody rule requirements.
Is Your Investment Adviser Aware of the Custody Implications of Accepting Client Securities
March 26, 2010
Accepting third-party checks and securities for forwarding to a client’s qualified custodian seems to be a common practice at many investment advisory firms. Many investment advisers process the delivery of third-party checks and securities as a convenience to clients; however, it is important to understand the implication such processes have on the firm’s custody policies and procedures.
Is Your Pooled Investment Vehicle In Compliance with the SEC’s New Custody Rule for Investment Advisers
March 21, 2010
The recent changes by the U.S. Securities and Exchange Commission (“SEC”) to Rule 206(4)-2 under the Investment Advisers Act of 1940 include an important development for investment advisers that operate so called pooled investment vehicles. Pooled investment vehicle is an SEC term and includes private investments such as limited liability companies and limited partnerships not registered as investment companies. For example, unregistered hedge funds fall under this category.
Does the SEC’s new Internal Control Report Requirement Impact your Investment Adviser Firm or Introducing Broker/Dealer?
March 21, 2010
Internal Control Report
SEC Offers Guidance to Investment Advisers for Co-Trustee Arrangements Under the New Custody Rule
March 11, 2010
Yesterday, the Division of Investment Management of the U.S. Securities and Exchange Commission (“SEC”) updated its Staff Responses to Questions About the Custody Rule. In the updated responses, the Division provided guidance for co-trustee arrangements. As a result of the new guidance, we have revised our Investment Adviser Compliance Alert published yesterday. For an updated version, please click here.
Our Complimentary White Paper About the SEC’s New Custody Rule for Investment Advisers Is Now Available
March 11, 2010
Due to overwhelming number of questions and apparent confusion among many federally registered investment advisers, we’ve prepared a complimentary white paper exploring the new custody rule of the United States Securities and Exchange Commission (“SEC”). This white paper provides details regarding the definition of custody, examples of custody and requirements under the new SEC rule. To obtain a copy of our white paper, please click here.
Effective Date for SEC’s New Custody Rule Is Less than 4 Weeks Away
February 14, 2010
Is your federally registered investment adviser firm ready for the SEC’s new custody rule?
A Registered Investment Adviser Needs to Ensure that Power of Attorney Over Client’s Account Is Limited
October 02, 2009
In order to trade or otherwise access a client’s account held by a custodian, a registered investment adviser must be granted written authorization by the client. Such authorization is generally granted in the form of a power of attorney. Although a power of attorney over a client’s account is necessary for a registered investment adviser to manage the client’s account, it is important for an investment adviser to ensure that the power of attorney is limited to only the functions actually intended by the client and the investment adviser.
