7.28.2009 The Managed Funds Association (MFA), the trade group for the hedge fund industry, submitted a comment letter to the SEC about the SEC’s proposed amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940, which governs custody of advisory client assets. The MFA recommends 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 Public Company Accounting Oversight Board (PCAOB), and to distribute audited financial statements, prepared in accordance with generally accepted accounting principles, to each investor in the fund. The MFA also recommends 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.

Click http://www.managedfunds.org/downloads/MFA%20Comments%20to%20Custody%20Proposals.pdf to access the comment letter.