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What protections does the Custody Rule offer my investors?

The Custody Rule offers the following protections:

  • A requirement that the investment advisor must maintain funds and securities with a qualified custodian
  • A requirement that clients are notified promptly in writing by the investment advisor of the qualified custodian’s name, address, the manner in which the funds or securities are maintained at the opening of the account by an investment advisor on a client’s behalf, and any changes to this information thereafter
  • A requirement that the investment advisor obtains a reasonable belief that the qualified custodian sends an account statement, quarterly or more frequently, to each client for which it maintains funds or securities, identifying both the number of funds of each security in the account at the end of the period and all transactions in the account during the period
  • A requirement for an independent verification (surprise audit) on an annual basis