Advisor, Industry Groups Blast SEC Custody Proposal
by: Mark Schoeff Jr.
Organizations representing investment advisors and financial firms warned the U.S. Securities and Exchange Commission (SEC) that a proposal to overhaul custody rules would impose significant costs and regulatory burdens on advisors and crimp their latitude to manage client accounts. The| proposal, which the SEC released in February, would extend custody obligations beyond securities and funds, which are covered by the current rule, and include all assets in a client’s portfolio. Under the proposal, an advisor who can make trades on behalf of a client would be deemed to have custody of the client’s assets. The proposal also would require advisors to enter a written agreement with a qualified custodian to protect customer assets. In comment letters that were due May 8, critics questioned the justification for the rule and accused the SEC of regulatory overreach.
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