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The SEC, in addition to state regulators, has the right to audit RIA firms. To ensure that a regulatory review reveals no discrepancies or omissions, it is imperative that firms employ efficient and effective records management systems. Although there may have been no wrongdoing in terms of how you advised clients and traded assets, your firm might find itself in trouble with financial industry regulators if your firm’s records do not completely satisfy all regulatory requirements.
Rule 204-2 of the Investment Advisers Act is usually referred to as the “books and records rule.” The rule’s list of books and records to be maintained is quite extensive:
Most state regulations are quite similar to the SEC record-keeping requirements.
It takes a specific skill set to effectively manage large-scale records collections. The extreme number of records that must be maintained is compounded by the time span involved. Generally, there is a five-year period in which records must be kept. Then there is the other part of the equation: In the event the authorities want to review a firm’s records, those records must be easily accessible.
To properly maintain your firm’s records, you need a dedicated team with the experience to help you manage and handle large number of records spanning several years. RIA provides guidance to numerous top investment firms, keeping advisors in compliance with SEC and state regulations.