Custody is an important part of an investment adviser’s compliance program. Over the years, the SEC has revised its custody rule and provided guidance through interpretive releases, deficiency letters and frequently asked questions. Two areas, in particular, have been unclear over the years. First, whether an adviser has custody if a client gives it authority to disburse assets to a third party through a standing letter of authorization. Second, whether an adviser has custody if it can transfer client funds between two or more of the client’s accounts at the same or different custodians. The SEC recently published guidance regarding these two issue which will help advisers maintain custody compliance. Each requires advisers and custodians to get client consents and acknowledgments limiting the adviser’s authority. In addition, the SEC published a Guidance Update to inform advisers about the risk of being given custody inadvertently by a custodian and client. Compliance Management members can find out more about this rule and other cybersecurity issues on RIAglass.