DONOHUE SAYS SEC WILL EXPAND BOOKS AND RECORDS RULE
Andrew Donohue, the Director of the SEC Division of Investment Management, said that he expects that the SEC will significantly expand the books and records required to be maintained by investment advisers. Arguing that much of the books and records rule (Rule 204-2) is outdated, he indicated that the SEC may recommend that advisers maintain all correspondence relating to clients, advice, performance, compliance, commissions, and audits as well as correspondence to or from clients, regulators, marketers, and broker-dealers. He also indicated that the SEC may require certain records (e.g. trading data, client lists, code of ethics breaches) to be maintained in electronically searchable formats.
OUR TAKE: It sounds like the Division of Investment Management is moving to a recordkeeping rule similar to the BD rules, which require retention of all client correspondence, trading data, and performance information.