Registered investment advisers should take note of recent pronouncements by the staff of the SEC’s Division of Investment Management (the Division) regarding Rule 206(4)-2 (the Custody Rule) of the Investment Advisers Act of 1940. The Division makes clear that many advisers may unwittingly have custody of client assets under the Custody Rule. Investment advisers should consider taking steps to avoid having imputed custody and take steps to comply with new requirements for standing letters of authorization.
The entire Katten advisory is available here.