Regulatory Alerts2022-10-26
Outsourcing by Investment Advisers
The Securities and Exchange Commission has proposed a new rule requiring registered investment advisers to perform due diligence and periodic monitoring before outsourcing covered functions to service providers. The proposal mandates specific oversight criteria, including risk assessment, subcontractor management, and orderly termination, alongside amendments to Form ADV and the books and records rule for third-party recordkeeping. These requirements aim to prevent client harm from service provider disruptions and compliance gaps while preserving the operational efficiencies that outsourcing provides.
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