Last week was a busy one for the LSTA in its continuing engagement with the SEC’s Division of Investment Management (“IM”) on the issue of whether registered investment advisers that trade loans and other assets that do not settle “delivery versus payment” (“DVP”), have “custody” of client assets under the Investment Advisers Act (the “Act”) and therefore must comply with the requirements of the custody rule. Why do we care? The custody rule has four central safekeeping requirements, the most onerous and relevant of which is the requirement that advisers that have custody engage an independent public accountant to conduct an expensive and burdensome annual surprise audit to verify client assets.
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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.