Chapter 6 Part 4 Flashcards
also must maintain other records, including A record of all personal
securities transactions of the investment adviser or any investment adviser representative. The record must show the name and quantity of the security, the price, the date of the transaction, whether the security was purchased or sold, and the name of the bank or broker-dealer through which the transaction was effected
also must maintain other records, including Under the Brochure Rule, a copy of
each written disclosure statement and amendment sent to clients, along with written acknowledgments of receipt from clients
also must maintain other records, including All documents needed to demonstrate the calculation of the
performance or rate of return for managed accounts or securities recommendations
also must maintain other records, including A copy of the Investment Adviser Codes of Ethics as well as records of any violations of
these codes and how the violations were resolved
If an investment adviser has custody or possession of securities or funds of clients, the adviser must prepare and maintain the following additional records
A journal showing all purchases, sales, receipts, and deliveries of securities, and all other debits and credits for the accounts; A separate ledger for each client showing all purchases, sales, receipts, and deliveries of securities, the date and price of each transaction, and all debits and credits; Copies of confirmations sent to clients; A record for each security in which a client has a position showing the name of the client, the amount of the client’s interest, and the location of the security
Look out for the
journal, blotter, and ledger. These are documents that must be maintained and produced on demand for the regulators
an investment adviser that provides investment, supervisory, or management services to a client must prepare and maintain
records for each client indicating the securities purchased and sold, and the date, quantity, and price of each transaction AND Records of each security in which clients have a position and the amount of each client’s interest
Both investment advisers and broker-dealers must keep
trade blotters-daily records of all purchases and sales of securities. The trade blotter should contain all the relevant information about a transaction, including the name and amount of the securities, the unit value and total value of the transaction, the trade date, the account for which the trade was executed, and the person (or entity) from which the securities were bought or to whom the securities were sold
Lifetime Records
Partnership agreements, articles of incorporation, charters, minute books, and stock certificate books are lifetime records. These records must be maintained for at least three years after the business is closed. An investment adviser no longer in business must arrange for its books and records to be preserved for the requisite time and will need to provide the SEC with written notification of the address where the records will be maintained.
Records may be stored on microfilm, microfiche, or similar media. The records may also be stored electronically, provided the storage system meets the following requirements
There must be reasonable safeguards to make sure the records are not destroyed or altered. For example, records stored on a CD-ROM should be tamper-evident so that any attempt to alter them would be readily apparent. Access should be limited to authorized personnel, SEC staff, and examiners. Any reproduction of the original records obtained from an electronic storage system must be accurate and legible. The records must be arranged and indexed in a way that provides for easy retrieval
an investment adviser has custody of client funds and securities when it
possesses these assets or has the ability to appropriate them
The Advisers Act requires investment advisers with custody to Deposit each client’s funds in a
“separate account with a qualified custodian. The accounts
must be maintained either in the client’s name or in the name of the adviser as agent or trustee. Records must be kept for each account showing where it is maintained, all deposits and withdrawals, and the amount of each client’s ownership in the account”
The Advisers Act requires investment advisers with custody to Notify each client, in
writing, of the place and manner in which the funds and securities will be maintained. Clients must also be notified of subsequent changes.
The Advisers Act requires investment advisers with custody to Send to each client, at least quarterly,
an itemized statement of all the funds, securities, and transactions effected in the account.
The Advisers Act requires investment advisers with custody to Arrange an unannonnced
“annual examination by an independent public accountant to verify
the amount of funds and securities. The accountant must file Form ADV-E with the SEC within 120 days following the examination. If required, the accountant must also file this form with the state regulators”
