This past Friday, the staff of the Division of Investment Management issued its much anticipated responses to questions about the amended custody rule. I will address each one in turn, but since I have been focusing on the due inquiry requirement I want to start with that first. There had been a question of how an adviser could satisfy the due inquiry requirement when clients receive their account statements from their qualified custodian by way of a download from the custodian’s web site. here is the SEC’s response:
“Advisers whose clients receive electronic statements from qualified custodians must still form a reasonable belief after due inquiry that the clients are receiving those statements. The adviser may satisfy this requirement by, for example, being copied on the email notifications of account statement postings sent to clients in addition to having access to client statements on the custodian’s website, although this is not the exclusive means of forming that reasonable belief.”
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