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The Securities Division (the "Division") conducts examinations of state-registered investment advisers and of their offices both within Connecticut and outside of the state. We hope that this summary will provide investment advisers with an insight into our examination process and spotlight some of the issues the Division will review during an inspection.
If you or your firm are to be examined, Division staff will arrive at your place of business unannounced. The staff does not, as a normal course of business, schedule appointments. Examinations may last a day or longer and, if the location also serves as a broker-dealer main or branch office, the staff will examine the records of that entity as well.
During an examination, staff will review books and records to determine compliance with relevant laws and regulations and to detect any potential issues. As part of the examination process, staff may also interview individuals regarding the operations of the investment adviser.
The Division will review all records pertaining to an investment adviser's business during an examination, including certain of the following items:
Section 36b-31-14b of the Connecticut Uniform Securities Act Regulations and the Investment Advisers Act of 1940 should be consulted for further guidance regarding record keeping requirements for registered investment advisers.
After completion of the examination, Division staff will usually sit down with the adviser and discuss any problems and issues that may have been uncovered. This is also an opportunity for the adviser to ask any questions of staff. After the examiner leaves, if deficiencies or potential problems were discovered, a follow-up letter will be sent to the adviser. This letter will require an adviser to respond to the department in writing stating how the deficiencies will be corrected. The adviser usually has a two-week period in which to respond. If no deficiencies or issues are noted during an examination, the Division will not issue a letter and the examination file will be closed.
The resolution of problems discovered during an examination will be contingent on their severity. In some instances, an issue(s) may be corrected at the time of the examination and, in other cases, the Division may conduct a follow-up examination. As stated previously, an adviser will generally receive a letter from the Division in the event deficiencies or issues are noted during an examination. In a small number of cases where more severe violations have occurred, an adviser can be subject to administrative orders, fines and civil/criminal penalties.
This discussion of the Division's examination process has been provided as a courtesy to industry. It should not be considered a complete guide to the Division's regulatory program, nor should the information provided be considered a substitute for the official statutes and regulations that pertain to investment advisers. Do not rely solely upon this page for guidance! If you have specific questions, please call the Division at (860) 240-8230 or toll free at 1-800-831-7225. Thank you! Licensing Information | Securities Division Who is subject to the custody rule?[1] As revised, the Custody Rule generally requires advisers registered with the SEC: (i) to maintain client funds and securities with a qualified custodian; (ii) to have the qualified custodian send account statements directly to advisory clients;, (iii) to undergo an annual surprise examination by an independent ...
What is qualified custodian?(1) Qualified custodian. A qualified custodian maintains those funds and securities: (i) In a separate account for each client under that client's name; or. (ii) In accounts that contain only your clients' funds and securities, under your name as agent or trustee for the clients.
Is Carta a qualified custodian?For avoidance of doubt, Carta does not act in the capacity of or provide services as a “qualified custodian” under SEC Rule 206(4)-2 under the Investment Advisers Act of 1940. Carta will not accept, or be responsible for, custody of any securities of Client.
Which of the following is not a qualified custodian under nasaa rules?Which of the following is NOT a qualified custodian under NASAA rules? The best answer is D. - Foreign financial institutions holding financial assets for customers.
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