The U.S. Securities and Exchange Commission is proposing rule amendments to beef up oversight of investment advisors that retain custody of client assets.

The SEC is seeking public comment on proposed rules, which are intended to ensure that investment advisors who have custody of clients’ assets are handling those assets properly. Among other things, the SEC would have an independent accountant conduct surprise inspections to ensure client assets are accounted for; and, firms would be subject to a custody control review. The proposed measures would also include reporting requirements designed to alert the SEC staff and investors to potential problems.

“These new safeguards are designed to decrease the likelihood that an investment advisor could misappropriate a client’s assets and go undetected,” said SEC chairman, Mary Schapiro. “That’s because an independent public accountant will be looking over their shoulder on at least an annual basis.”

The commission notes that recent enforcement cases have involved firms and individuals misusing clients’ money and covering up their illicit activities by distributing false account statements.

The proposals are out for a 60-day comment period.

IE