The “Compliance Rule” under the Advisers Act (Rule 206(4)-7) requires RIAs to adopt and implement written policies and procedures reasonably designed to prevent violation, by you and your supervised persons, of the Advisers Act and the rules that the Commission has adopted under the Act. Among other critical areas, these policies and procedures must address the safeguarding of client assets from conversion or inappropriate use by advisory personnel.
With the Compliance Rule in mind, firms should establish robust policies and procedures to cover and address critical risk areas in relation to the safeguarding of client assets. Areas to consider may include the following items: