SEC Warns That Advisors Are Mishandling Assets

On March 4, 2013, the SEC released an investor alert that warned that they had “found significant deficiencies in the way that investment advisers are handling the custody of client assets.”

In the alert, the SEC said “that in recent examinations, custody-related problems were identified in one-third of the firms reviewed, or about 140 firms. Advisors have failed to recognize that they maintain control of their clients’ assets, mixed together client, proprietary and employee assets in a single account and fallen short of surprise-exam requirements.”

The firms with problems were ordered to change their custody compliance policies and procedures, modify their business practices or devote more resources to custody issues. In the severe cases, the SEC examiner referred the incident to the SEC’s Division of Enforcement.

Chairman Elisse Walter stated “safeguarding of assets is central to investor protection, it is critical that investment advisors follow our rules when they maintain custody of their clients’ funds.”

Most investment advisors house their clients’ assets with a third-party custodian, such as Charles Schwab & Co. or TD Ameritrade Inc. Furthermore, most investment fraud occurs when the fraudster maintains clients’ money themselves.

The Doss Firm, LLC represents investors nationwide who have lost money as a result of investment fraud or due to faulty investment advice. If you believe that you may be a victim of investment fraud and would like to speak with us, please call our firm for a free consultation.