☰

M. Continuo

SEC proposes tougher investment adviser rules


    WASHINGTON (Reuters) - U.S. securities regulators proposed tougher rules designed to ensure that investment advisers are more accountable for their client's assets in the wake of Bernard Madoff's massive fraud.

    The Securities and Exchange Commission voted 5-0 on Thursday to propose that investment advisers who hold their client's assets undergo a surprise exam once a year to make sure those assets exist.

    In most cases, investment advisers do not physically control their clients' assets, and those assets are maintained with a broker-dealer or bank, also known as a qualified custodian.

    But the investment advisers who have "custody" of their customer's assets either physically control or have the authority to withdraw their clients' funds.

    The proposal is open for public comment and needs to be formally adopted before it becomes a rule.

    (Reporting by Rachelle Younglai; Editing by Lisa Von Ahn)