Comment Letter - SEC’s proposal on safeguarding advisory client assets

Overview

In our comment letter, we recommend that the SEC broaden or add certain control objectives for qualified custodians’ internal control reports and clarify the service(s) that would satisfy asset verification requirements of privately offered securities and physical assets. We also recommend that the SEC clarify the scope of surprise examination procedures relevant to the new rule. Among other things, we also recommend that the SEC clarify the definition of the term material discrepancy, allow foreign entity financial statements to be audited in accordance with the International Standards on Auditing and require the registered investment adviser, rather than the independent public accountant, to notify the SEC of certain events, such as the issuance of a modified opinion or termination of an engagement.