Rule 204-2 under the Investment Advisers Act identifies the books and records that a Registered Investment Adviser (“RIA”) is required to create and retain. Pursuant to the SEC rule and similar state rules, books and records must be maintained and preserved in an easily accessible place for not less than five years from the end of the fiscal year during which the last entry was made on the record. For the first two years, the books and records must be retained in an appropriate office of the RIA.
Firms must implement safeguards to ensure that records are preserved from loss, destruction, tampering, or unauthorized intrusion. They must be able to produce those records promptly in response to a request from securities regulators.
Articles of incorporation, as well as any amendments to them, must be maintained in the principal office of the RIA and preserved for at least three years after the termination of the firm. This retention period also applies to partnership articles, operating agreements, articles of organization, stock certificates, charters, and minute books.
RIAs must keep voluminous books and records including the following:
- Copies of all versions of the firm’s compliance manual;
- Annual reviews of policies and procedures if required;
- Lists of all current and former clients, as well as their contact information;
- Cash receipts, disbursements, internal working papers, and financial statements;
- Checkbooks, bank statements, cancelled checks, and cash reconciliations for the firm;
- Copies of all written agreements between clients and the firm;
- Documentation of discretionary authority if applicable;
- Documentation showing client approval of transactions if the firm only has non-discretionary authority;
- Copies of all client correspondence including e-mails;
- Copies of all client complaints and their resolution;
- Documentation showing that disclosure brochures and supplements were provided when required;
- Documentation proving delivery of privacy notice when required;
- Copies of reports required by the firm’s Code of Ethics;
- Documentation related to solicitor relationships if applicable;
- Advertisements, including all websites, blogs, and social media used for business purposes.
If RIAs advertise performance, they must retain all account information, internal working papers, and any other records that are necessary to calculate the performance or rate of return referenced in the advertisement.
Depending upon the firm’s business model and where it is registered, a number of additional books and records may be required. Without books and records, RIAs are not able to prove they complied with their fiduciary and compliance obligations.
About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Boca Raton, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.
RIA Compliance Group, LLC – 5301 North Federal Highway, Suite 380, Boca Raton, FL 33487 – Tel: 561-600-0564 – firstname.lastname@example.org.