Corporate & Securities Law

Investment advisory firms that act as trustees and have some form of asset custody are weighing whether to continue offering the services in light of new SEC rules that include mandated surprise audits and go into effect March 12. 

The surprise audits, to be conducted annually at the advisory firm's expense, will involve independent accountants reviewing financial records, verifying the existence of client funds and affirming that client assets and trades are as the adviser reported them.  The audits are part of a package of new rules adopted by the SEC in December in response to the Ponzi scheme perpetrated by Bernard L. Madoff Investment Securities.  With the first audit required by year-end, the more than 1,300 SEC-registered advisers who serve as trustees now must gear up to comply.

SNSFE assists investment advisers nationwide in regulatory and compliance matters.