MFA Comments to SEC on Custody of Funds or Securities of Clients by Investment Advisers

MFA submitted a letter to the Securities and Exchange Commission today in response to its proposed amendments to its custody rule, Rule 206(4)-2, under the Investment Advisers Act. In our letter, we recommend that the SEC require registered investment advisers to pooled investment vehicles with custody of client funds or securities to arrange for each pooled investment vehicle to be subject to an annual audit conducted by an independent public accountant registered with, and subject to inspection by, the PCAOB, and to distribute audited financial statements, prepared in accordance with generally accepted accounting principles, to each investor in the fund. We also recommend that if the SEC were to require investment advisers to arrange for an annual surprise exam, it should clarify the procedures that an accounting firm must follow in performing the exam.