TD Ameritrade: Advisory firms registered with the SEC should be required to do annual custody reviews

Compliance officers at investment advisory firms registered with the SEC should be required to conduct annual custody reviews and to certify those results, according to TD Ameritrade Institutional.
JUL 27, 2009
Compliance officers at investment advisory firms registered with the SEC should be required to conduct annual custody reviews and to certify those results, according to TD Ameritrade Institutional. The firm made that recommendation and others in a July 24 comment letter filed with the Securities and Exchange Commission to oppose a controversial proposal that would subject thousands of investment advisers to surprise exams by outside auditors. The public-comment period on the proposal to require the roughly 6,000 federally registered investment advisory firms that deduct their fees from client accounts to be subject to surprise audits ends tomorrow. The benefits of the SEC proposal “would be minimal at best, since the [investment advisory firms] do not have true custody, but the costs would be substantial,” Thomas Bradley, president of Jersey City, N.J.-based TD Ameritrade Institutional, wrote in the letter. TD Ameritrade provides custody services to about 4,000 advisory firms that manage about $80 billion in assets. It is encouraging its advisers to file their own comment letters to oppose the proposed rule change and has even offered them a sample letter that they can use and send to the commission. Both TD Ameritrade's comment letter and the one it is offering to advisers includes recommendations to protect investors from future scandals. In addition to requiring advisory firm compliance officers to certify annual custody reviews, the should SEC conduct more inspections of investment advisory firms and focus more heavily on matters involving custody assets, TD Ameritrade said. The commission should also provide guidance on the maximum fee that advisory firms can deduct through independent custodians, and investment advisers should be required to notify clients when fees are withdrawn from their accounts, TD Ameritrade suggested. “Rather than looking to [investment advisory firms] and their clients to bear the costs of surprise audits, the SEC should be enlarging its staff and greatly increasing the frequency of its [investment advisory firm] inspections, with a greater focus on client asset custody matters,” wrote Mr. Bradley in TD Ameritrade's comment letter.

Latest News

Vanguard seeking SEC green light to expand trademark tax-busting fund design
Vanguard seeking SEC green light to expand trademark tax-busting fund design

The Jack Bogle-founded firm is looking to apply its famed dual-share class structure to actively managed strategies.

Advisor moves: LPL and Raymond James add veteran advisors in California
Advisor moves: LPL and Raymond James add veteran advisors in California

LPL welcomes a Beverly Hills-based practice from Wedbush Securities as RayJay adds a Stifel alum to its employee advisor arm.

Is the SEC's private fund exemption rule about to change?
Is the SEC's private fund exemption rule about to change?

House bill seeks inflation-based adjustment to private fund advisor exemption.

Congress pushes to make fintech oversight offices permanent at SEC, CFTC
Congress pushes to make fintech oversight offices permanent at SEC, CFTC

A new House measure would enshrine FinHub and LabCFTC as permanent fixtures, deepening ties with financial technology sector.

CFP Board names Barry Gersten head technology officer
CFP Board names Barry Gersten head technology officer

The seasoned IT leader arrives as the credentialing body for CFP professionals considers AI's implications for the future of financial planning.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave