The staff of the SEC’s Division of Investment Management (the “staff”) granted no-action relief that will allow an investment adviser registered under the Investment Advisers Act of 1940 (the “Advisers Act”) to rely on a third party service (the “Service”) that currently provides the adviser with trade confirmations for client transactions in electronic form to also maintain those confirmation records in a manner that satisfies the adviser’s recordkeeping obligations under the Advisers Act with respect to client trade confirmations. Absent the the relief, an adviser using the Service for electronic confirmation delivery must download or print copies of the electronically transmitted confirmations. If an adviser engages it for recordkeeping purposes, the Service will store at least two electronic copies of each trade confirmation for not less than five years from the end of the fiscal year during which the last entry was made on the confirmation, with at least one copy stored in a separate, secure facility. During the retention periods specified in the Advisers Act recordkeeping rules, an adviser will be able, at any time, to access confirmations kept by the Service using computers in the adviser’s offices. An adviser that stops using the Service for recordkeeping purposes may request in writing copies of any confirmation maintained by the Service for not less than five years from the end of the fiscal year during which the Service last made an entry on the confirmation. If an adviser that has used the Service ceases operations without making adequate provision for its ongoing recordkeeping obligations under Advisers Act Rule 204‑2(f), the Service will provide the SEC without charge within 24 hours of a request an electronic copy of any confirmation maintained for the adviser for not less than five years after the end of the fiscal year during which the Service last made an entry on the confirmation. In the event the Service ceases operations, it will make arrangements reasonably acceptable to the SEC or its staff to ensure the continued availability of adviser records for regulatory purposes during the remainder of the applicable recordkeeping periods. The Service’s internal systems for making and keeping confirmations on behalf of an adviser will meet all of the requirements for electronic recordkeeping under Advisers Act Rule 204-2(g).
Alert August 18, 2009