Registered Investment Advisers who have custody of their clients’ funds or securities must safeguard those funds as required by the SEC’s “custody rule.” The custody rule is designed to provide additional safeguards for investors against the possibility of theft or misappropriation by investment advisers who are registered with the SEC. If a registered investment adviser has custody of client assets, it must enter into a written agreement with an independent public accountant to examine those assets on a “surprise” basis every year. For more information regarding what encompasses “custody” visit the SEC website here.
There is no “due date” so to speak for this annual surprise examination. However, the annual surprise exam auditor’s report must be submitted to the SEC by the independent auditor within the calendar year.
For more information regarding RIA custody exams, call Mike Coglianese at 630-351-8942 or email mike@cogcpa.com.