Sara Crovitz, partner at Stradley Ronon in Washington, told ThinkAdvisor Thursday that the custody rule was last amended after the Bernie Madoff scandal, and that "the definition of custody is quite broad, which has led to some unintended consequences that the industry and SEC staff have grappled with over the years."
Crovitz, a former deputy chief counsel at the SEC, said she hopes the agency's proposal "takes into account all of that work and identifies an investor-friendly and still practical way of approaching custody. I also would assume that this proposal will set forth the SEC's views on custody of digital assets."
Gail Bernstein, general counsel for the Investment Adviser Association in Washington, said in another email Thursday that IAA "is eager to review the SEC's proposal to modernize" the custody rule.
"Safeguarding client assets is of paramount importance and we hope the SEC will adopt a risk-based approach that aligns controls with the type of risks presented, and that it streamlines the confusing patchwork of guidance that's developed over the years," Bernstein said.
Issa Hanna, partner at Eversheds Sutherland in New York, told ThinkAdvisor he hoped the SEC, in proposing a rule, would "take this opportunity to clarify some ambiguities under the existing rule so that firms have more certainty regarding their obligations."
