• Deborah

Published on October 26, 2022 by the Securities and Exchange Commission (SEC), the Proposed Rule and related amendments will prohibit SEC-registered investment advisers from outsourcing certain services or functions to service providers without meeting minimum requirements.

The Proposed Rule requires registered investment advisers to:

  • Conduct due diligence before outsourcing and to periodically monitor service providers’ performance. Advisers will also have to reassess whether to retain their service providers.

  • Adopt and implement internal processes and/or systems for making and/or keeping records that meet the requirements of the recordkeeping rule applicable to the books and records being maintained on behalf of the adviser.

  • Make and/or keep books and records related to the due diligence and monitoring requirements.

  • Provide access to electronic records.

  • Ensure the continued availability of records if the third party’s relationship with the adviser or its operations cease.

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