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.