N.J. Admin. Code § 13:47A-7.2

Current through Register Vol. 56, No. 21, November 4, 2024

Section 13:47A-7.2 - Custody of clients' funds or securities

(a) The term "custody of clients' funds or securities" as used in 49:3-57(e) shall mean holding directly or indirectly, client funds or securities, or having any authority to obtain possession of them or having the ability to appropriate them except as an incident to transactions with or for customers that are promptly consummated by payment or delivery.

(b) Custody of client's funds or securities shall include:

1. Possession of client funds or securities, (but not of checks drawn by clients and made payable to third parties), unless received inadvertently and returned to the sender within three business days of receipt;

2. Any arrangement (including a general power of attorney and direct fee deduction arrangements) authorizing or permitting the withdrawal of client funds or securities maintained with a custodian upon the investment adviser's instruction to the custodian; and

3. Any capacity (such as general partner of a limited partnership, managing member of a limited liability company or a comparable position for another type of pooled investment vehicle, or trustee of a trust) that gives a supervised person legal ownership of or access to client funds or securities.

N.J. Admin. Code § 13:47A-7.2

Amended by 47 N.J.R. 2155(a), effective 8/17/2015