Adviser record retention

Advisers must retain all records related to the code of ethics for 5 years. The SEC anticipates that many of these records will be maintained electronically.

(12) Every investment adviser registered or required to be registered under section 203 of the Act (15 U.S.C. 80b-3) shall make and keep true, accurate and current the following books and records relating to its investment advisory business;

(i) A copy of the investment adviser’s code of ethics adopted and implemented pursuant to §275.204A-1 that is in effect, or at any time within the past five years was in effect;

(ii) A record of any violation of the code of ethics, and of any action taken as a result of the violation; and

(iii) A record of all written acknowledgments as required by §275.204A-1(a)(5) for each person who is currently, or within the past five years was, a supervised person of the investment adviser.

All books and records required to be made under the provisions of [paragraph] (a) . . . shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in an appropriate office of the investment adviser.

(13)(i) A record of each report made by an access person as required by §275.204A-1(b), including any information provided under paragraph (b)(3)(iii) of that section in lieu of such reports;

(ii) A record of the names of persons who are currently, or within the past five years were, access persons of the investment adviser; and

(iii) A record of any decision, and the reasons supporting the decision, to approve the acquisition of securities by access persons under §275.204A-1(c), for at least five years after the end of the fiscal year in which the approval is granted.

(e)(1) All books and records required to be made under the provisions of paragraphs (a) . . . (except for books and records required to be made under the provisions of paragraphs . . . (a)(12)(i), (a)(12)(iii), (a)(13)(ii), (a)(13)(iii) . . . of this section), shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in an appropriate office of the investment adviser.

. . . We proposed, but are not requiring, records of access persons’ personal securities reports (and duplicate brokerage confirmations or account statements in lieu of those reports) to be maintained electronically in an accessible computer database. Commenters were concerned that the requirement would be unduly burdensome and would require them to input large quantities of data manually. Although we are not adopting this requirement, as discussed above, we have strong expectations that most advisers will need to maintain these records electronically in order to meet their responsibilities to review these records and monitor compliance with their codes.

The standard retention period required for books and records under rule 204-2 is five years, in an easily accessible place, the first two years in an appropriate office of the investment adviser. . . . Advisers must maintain the records required under amended rule 204-2(a)(12) and (13) for this standard period, subject to special holding requirements for certain categories of records as specified in amended rule 204-2(a)(12) and (13). Codes of ethics must be kept for five years after the last date they were in effect. Supervised person acknowledgements of the code must be kept for five years after the individual ceases to be a supervised person. . . . Similarly, the list of access persons must include every person who was an access person at any time within the past five years, even if some of them are no longer access persons of the adviser.⁶⁵ . . .

⁶⁵ In addition, records supporting decisions to approve access persons’ acquisitions of IPOs or private placements must be retained for at least five years after the end of the fiscal year in which the approval is granted. . . .

SEC Final Rule, Investment Adviser Codes of Ethics (Jul. 2, 2004), IA-2256, IC-26492

[RIN 3235-AG27]