Description:

One of the many outgrowths of the Madoff debacle, according to recently-appointed SEC Chair Mary Shapiro, will be an emphatic focus on promoting the “safe and sound custody of customer assets” by regulated entities. The SEC earlier this year launched a review of firms’ custodial arrangements and controls to ensure that client’ assets are kept safe and their existence verified. Compliance with the safekeeping and other provisions of the Advisers Act custody rule, Rule 206(4)-2, will be front and center for SEC examiners in 2009. Our expert speakers will first walk you through core elements of the rule including:

• the definition of custody
• use of qualified custodians and delivery of account statements
• client use of independent representatives
• special provisions for pooled investment vehicles and privately-offered securities;
• implications of direct debiting of fees and affiliate custody
• and surprise examinations by an independent public accountant

The program will also address unintended custody and relevant SEC no-action relief, controls to protect against personnel misappropriating client assets, ongoing due diligence of qualified custodians and verifying that client statements are being delivered, due diligence of custodial arrangements of third-party managers, and procedures for transferring funds to appropriate custodians.

Another topic on the agenda for this Desktop is “Class Action Claim Issues for Advisers.” With the exponential profusion of class action litigation that will no doubt be spawned in the wake of recent market turmoil, advisers will be compelled to examine their handling of class action claims involving securities held in client accounts. In recent years, a number of mutual fund advisers have been sued for failing to file class action claims on behalf of their fund clients. SEC examiners have also made inquiries about adviser practices regarding this issue. Our speakers will map out the scope of an adviser’s duty in this area, prudent best practices as to defensible policies and procedures, appropriate coverage in Form ADV and investment management agreements, client notification and the process for filing proofs of claim.

 

Learning objectives:

Custody and Safekeeping Requirements

• Understanding the core elements of the custody rule requirements

• How to avoid and address having unintended custody

• How to conduct ongoing due diligence of qualified custodians and third-party custody arrangements

• Controls to protect against personnel misappropriating client assets

Best Practices for Handling Client Class Action Claim Issues

• Understanding the scope of an adviser’s duty in this area and what constitutes prudent best practices

• Determining appropriate policies and procedures

• Addressing class action claim practices in Form ADV and investment management agreements

• Filing proofs of claim
  
  

For whom:

Investment advisers, legal counsel, compliance professionals
 

Pre-requisites for participation:

None