SEC Amends The Advisers Act Custody Rule

The SEC recently adopted amendments to the Investment Advisers Act custody rule that are intended to provide advisory clients with additional protections when a registered investment adviser has access to client assets.¹ See Custody of Funds or Securities of Clients by Investment Advisers, Advisers Act Release No. 2968 (http://www.sec.gov/rules/final/2009/ia-2968.pdf) (Dec 30, 2009), These changes were proposed following a series of enforcement actions involving misappropriation of client assets by investment advisers and broker-dealers and represent the first step in the SEC's effort to enhance custody protections, with enhancements to the broker-dealer customer protection rules likely to follow.