JLG Legal Risk Management Tip – California’s Revised Custody Rule Seeks Uniformity

027455-glossy-black-icon-culture-state-californiaJacko Law Group, PC (“JLG”) each month publishes a Legal Tip, written by one of its professional staff on a relevant topic specific to the securities industry. In late May 2014, JLG’s Attorney, Robert Boeche, wrote and released a Legal Tip that highlights California’s recent adoption of revisions to the investment adviser custody rule (California Code of Regulations, Title 10, Section 260.237) (the “Rule”) by the California Department of Business Oversight (“DBO”), and how these revisions and additions to the custody Rule impact California investment advisers. The adoption of revisions and additions to the Rule – many of which defer to definitions and language found in the North American Securities Administrator’s Association’s (“NASAA’s”) Model Custody Rule – serves to “increase uniformity” between the rules for California investment advisers and SEC registered advisers on custody issues. The article focuses in on three major revisions and additions, including 1) notification requirements for advisers deemed to have custody to the Securities and Exchange Commission (“SEC”) and clients; 2) annual surprise examinations on adviser’s assets and books & records; and 3) new compliance issues for advisers to pooled investment vehicles to consider in order to be exempt from annual surprise examinations. “Custody related deficiencies are consistently one of the most targeted areas of state regulatory examinations,” and as such, Boeche recommends that a “solid understanding” of the new guidelines and areas that trigger the custody rule should be thoroughly studied by all California investment advisers. To read a PDF of the full article “California’s Revised Custody Rule Seeks Uniformity,” please click here. To browse our Legal Risk Management Tips library, including insightful articles on a wide range of industry topics, please click here. For further information on this and other related subjects, please contact us at info@jackolg.com  or (619) 298-2880.


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