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Advisors’ Recordkeeping Obligations

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Advisors have recordkeeping obligations under the Investment Advisers Act (the “Act”) an similar state provisions. All regulatory exams involve requests for documentation from advisors so recordkeeping violations are relatively easy for regulators to detect. The state of advisors’ recordkeeping and their ability to respond to record requests will often determine the regulators’ first impression of a firm’s internal controls. Adequate records are also one of the best ways, and in some cases the only way, for advisors to demonstrate compliance with substantive provisions of the Act or similar state statutes. On the other hand, failing to maintain proper books and records provides an easy avenue for regulators to sanction the advisor even if the advisor is otherwise running a compliant business.

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