Advisers Could be Mishandling Your Assets, Says SEC

Advisers Could be Mishandling Your Assets, Says SEC

In a recent investor alert, the Securities and Exchange Commission warned that it has found significant deficiencies in the way investment advisers are handling the custody of client assets.

The SEC revealed that their recent examinations unearthed custody-related problems in one third of the firms reviewed. Advisers failed to recognize that they control their clients’ assets, co-mingled client, proprietary and employee assets and fell short of surprise-exam requirements.

Advisers cited by the SEC had to change their custody compliance policies and procedures, modify their business practices or devote more resources to custody issues.
SEC Chairman Elisse Walter notes that because safeguarding assets is central to investor protection, investment advisers need to follow SEC rules when they maintain custody of their clients’ funds.

Most investment advisers prudently house their clients’ assets with a third-party custodian such as Charles Schwab & Co. or TD Ameritrade Inc. In contrast, the $65 billion Ponzi scheme perpetrated by Bernard Madoff represents a questionable way to handle clients’ funds. Madoff’s firm maintained custody of his clients’ money.

The lawyers at Starr Austen & Miller LLP handle cases involving securities arbitration, misrepresentation, overconcentration, broker fraud, negligence, broker churning, breach of trust and malpractice.

Source: Article “SEC Warns Investors that Advisers Could be Mishandling Assets,” by Mark Schoeff Jr., in Investment News.