About six months ago in response to the uproar over the Bernie Madoff fraud, the SEC proposed updates to the custody rule that would require RIAs who debit fees from client accounts to be subject to surprise audits.
Needless to say, this proposal did not go over well, especially when costs for surprise audits were estimated to be north of $8,000.
See previous posts on FPPad: Proposed SEC Custody Rules Could Cost Advisers Extra $8,100 and SEC Surprise Audit Proposal Likely to be Dropped According to FPA.
Yesterday the SEC passed new custody regulations, and the surprise audit provision for RIAs who only debit fees was dropped. In addition, the SEC published a custody matrix, if you will, defining the different adviser arrangements along with their respective duties and responsibilities.
The folks over at RIABiz posted more about the custody provisions, plus they included the custody matrix chart for reference.
Click here to view the custody matrix on the RIABiz website.
