The Investment Advisers Act of 1940 Rule 204-2 enforces a significant regulatory obligation on all investment advisers registered with the Securities and Exchange Commission (SEC). This involves preserving books and records related to their investment advisory activities.
Under the Dodd-Frank Financial Reform Act, this rule now also applies to hedge funds and private equity firms.
What are the requirements of Rule 204-2?
Rule 204-2 mandates investment advisers to maintain books and records, including but not limited to:
- Communications, including electronic communications
- Orders
- Client agreements
It covers the preservation of off-channel electronic communications like email and text, permitting electronic recordkeeping with safeguards for data integrity and accessibility. Investment firms must also establish written supervisory procedures to prevent any violations.
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