As a registered adviser, you must make and keep true, accurate and current certain books and records relating to your investment advisory business. Federal covered advisers registered under section 203 of the Act (15 U.S.C. 80b-3) are required by the SEC to make and keep true, accurate and current books and records relating to its investment advisory business of the following:

  • A journal, including cash receipts and disbursements records;
  • General and auxiliary ledgers reflecting asset, liability, reserve, capital, income and expense accounts;
  • A memorandum of each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or instruction;
  • All check books, bank statements, cancelled checks and cash reconciliations of the investment adviser;
  • All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such;
  • All trial balances, financial statements, and internal audit working papers relating to the business of such investment adviser;
  • Written communications, to and from clients;
  • A record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client;
  • All powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof;
  • All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such;
  • Copies of all advertising and other distributed materials.;
  • A copy of the investment adviser’s code of ethics, a record of any violation of the code of ethics, and a record of all written acknowledgments for each person who is currently, or within the past five years was, a supervised person of the investment adviser;
  • Personal transaction reports;
  • A copy of all documents in Part 2 and Part 3 of the Form ADV, any summary of material changes, and documentation describing the method used to compute managed assets;
  • All written acknowledgments of receipt obtained from clients and copies of the disclosure documents delivered to clients by solicitors;
  • Accounts, books, working papers and other records substantiating prior performance claims;
  • A copy of the adviser’s policies and procedures that are in effect (or at any time within the past five years were in effect), any records documenting the adviser’s annual review of those policies and procedures, and a copy of any internal control report obtained or received.
  • Books and records that pertain to §275.206(4)-5 containing a record of: (see §275.204-2 for the full list).

For investment advisers who have custody of client assets, the records required include:

  • A journal showing all purchases, sales, receipts and deliveries of securities (including certificate numbers) for such accounts and all other debits and credits to such accounts.
  • A separate ledger account for each such client.
  • Copies of confirmations of all transactions effected by or for the account of any such client.
  • Record for each security held by client showing amount and location.
  • A memorandum describing the basis upon which you have determined that the presumption that any related person is not operationally independent under §275.206(4)-2(d)(5) has been overcome.

This is just an overview of the books and records requirements for investment advisers, for the full details, check out §275.204-2.

For assistance finding out how the books and records requirements apply to your Firm, contact us. MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting your firm’s compliance responsibilities.