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Custody Rule(s)! Ensure Your Compliance When You Hold Client Securities

May 10, 2022 (1 min read)

After some high-profile scandals involving the misappropriation of client assets, the U.S. Securities and Exchange Commission (SEC) has taken significant steps to enhance the safekeeping of client funds and securities by investment advisers including adopting Rule 206(4)-2 under the Investment Advisers Act of 1940, otherwise known as the Custody Rule. Among other things, the Custody Rule mandates that registered investment advisers with custody of client funds and securities adopt specific measures designed to facilitate the tracking and protection of client assets. As a result, attorneys advising investment adviser clients must understand the intricacies of the Custody Rule to help their clients mitigate regulatory risk.

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  • Custody Agreement (Hedge Fund) (Custodian)
    Review the provisions in this template agreement, containing valuable guidance and drafting notes to assist you in understanding and negotiating important terms when a form custody agreement is not already provided by a fund custodian (or even when one is!).

 

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