On December 30th, the SEC published the amendments to the custody and recordkeeping rules under the Investment Advisers Act of 1940 and related forms. The amendments are designed to provide additional safeguards under the Advisers Act when a registered adviser has custody of client funds or securities by requiring the adviser to, among other things, undergo an annual surprise examination by an independent public accountant to verify client assets; have the qualified custodian maintaining client funds and securities send account statements directly to the advisory clients; and unless client assets are maintained by an independent custodian, to obtain or receive from a related person, a report of the internal controls relating to the custody of those assets from an independent public accountant that is registered with and subject to regular inspection by the PCAOB. The new amendments will be effective 60 days after publication in the Federal Register which is expected during the week of January 4th. The SEC also published interpretive guidance for independent public accountants in connection with the new amendments. The guidance provides direction with respect to the independent verification and internal control report as required under the amended rule.