Amendments to the Books and Records Rule, Effective October 1st
WHAT HAPPENED?
Effective October 1st, advisers will be required to comply with the revised Books and Records Rule. Under the new rule, advisers must maintain additional records supporting the calculation and distribution of performance information. The amendments were made to rule 204-2(a)(7) and rule 204-2(a)(16) and will become effective for all marketing materials distributed on and after October 1, 2017. The amendments will implement the following changes:
- Rule 204-2(a)(7) –The amendment to this rule specifically requires advisers to maintain originals of all written communication received and copies of written communication sent relating to the performance or rate of return of any or all managed accounts or securities recommendations. Written communication including performance predating October 1, 2017, will also be subject to this amendment if distributed after the effective date.
- Rule 204-2(a)(16) – Under the current rule, registered advisers or advisers that are required to be registered must maintain all records supporting performance claims made in communications that are distributed to ten or more persons. The amendment to this rule will remove the ten or more persons condition and replace it with “any person.”
WHAT DOES THIS MEAN FOR ME?
The SEC’s amendments will support the staff in evaluating adviser performance claims while reducing the chance of advisers distributing misleading or fraudulent advertisements. Fairview® is available to assist clients with updating their written policies and procedures to reflect the new requirements of the Advisers Act books and records rule. Clients are encouraged to adopt the revised manual on or before October 1st.
