New Model Rules Pertaining to Investment Adviser Custody

NASAA’s Investment Adviser Section and Investment Adviser Regulatory Policy and Review Project Group are rereleasing for comment from interested persons proposed changes to the NASAA model rule pertaining to investment adviser custody.

Download: Background Memo and Proposed Model Rule

The comment period will remain open for 30 days. Accordingly, all comments should be submitted on or before May 19, 2011.

NASAA published for comment proposed changes to its model custody rule and in response received several comment letters. However, most comments focused on the requirement contained in paragraph section (b)(4)(A) mandating advisers provide investors in private funds detailed quarterly account statements.  After considering the comments both in favor and in opposition to this requirement, the Investment Adviser Section and Investment Adviser Regulatory Policy and Review Project Group are proposing further changes to this provision.  As more fully explained in the above memo, the Proposed Rule would continue to require quarterly statements, but the level of detail contained in the statements has been modified. The revisions to the Proposed Rule are limited to section (b)(4)(A). The Proposed Rule is being modified under both the Uniform Securities Act of 1956 and under the Uniform Securities Act of 2002.

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Issues & Advocacy, NASAA Proposals, Regulatory Activity, Request for Comment