Quarterly Form Custody Report
That’s six reports so far: FOCUS reports, the annual financial statement, customer statements, the report on material inadequacies, the compliance and exemption reports, and the independent public accountant’s annual audit.
We’re in the home stretch now—just one more report to go!
Under the amended rule, both carrying broker-dealers and introducing broker-dealers must also file an unaudited quarterly Form Custody report with the SEC. This report documents how the broker-dealer maintains custody of its customers’ securities and cash. It establishes a “custody profile” that auditors can use as a starting point for their custody examinations of the broker-dealer.
In the Form Custody report, introducing broker-dealers identify each broker-dealer to which its fully disclosed or omnibus customer accounts are introduced, whereas carrying broker-dealers must:
- • Indicate each location where they hold their customer or non-customer securities
- • Indicate whether they only carry their own accounts or whether they carry accounts for other broker-dealers
- • Indicate whether they send transaction confirmations directly to customers and whether they provide their customers with electronic access to information about the securities in their accounts
- • Indicate whether they operate as an investment adviser or as an affiliate of an investment adviser
The Form Custody must be filed within 17 business days of the end of each calendar quarter—thus, in coordination with the filing of FOCUS reports.
A broker-dealer that is a member of SIPC must also file its annual reports with SIPC so that SIPC can better monitor industry trends and enhance its knowledge of particular firms.
Broker-dealers must agree to allow the SEC to review the work papers of the independent public accountant on request. They must allow the accountant to discuss her findings with the examiners. A broker-dealer must file a