The Securities and Exchange Commission (SEC) has put forward a proposal to strengthen safeguarding rules for registered investment advisers (RIAs) in the US.
The SEC is seeking to enhance protection for customers by adding client assets to current custody rules, which currently apply to client funds and securities.
The proposed changes aim to make sure that advisers and qualified custodians provide the standard custodial protection when maintaining and advised client’s assets. This would include proper segregation of such assets and ensuring they are held in accounts in order to protect consumers in the event of bankruptcy or insolvency.
Under the proposals, reporting and recordkeeping obligations would be extended to include client assets as well.
SEC chair Gary Gensler said: “I support this proposal because, in using important authorities Congress granted us after the financial crisis, it would help ensure that advisers don’t inappropriately use, lose, or abuse investors’ assets.
“In particular, Congress gave us authority to expand the advisers’ custody rule to apply to all assets, not just funds or securities. Further, investors would benefit from the proposal’s changes to enhance the protections that qualified custodians provide.
“Thus, through this expanded custody rule, investors working with advisers would receive the time-tested protections that they deserve for all of their assets, including crypto assets, consistent with what Congress envisioned.”
RIAs and industry professionals will be able to provide feedback on the proposal within 60 days from its publication in the Federal Register.
