Monday, October 03, 2011

Massachusetts IAs Must Show Positive Net Worth

Investment advisers required to be registered in Massachusetts whose principal place of business is in the State, and who either exercise investment or brokerage discretion, have custody of their clients' funds or securities, or mandate the prepayment of advisory fees of more than $500 per client at least six months in advance are reminded by policy statement that they must maintain a positive net worth at all times and either: (1) post a $10,000 surety bond; or (2) create a separate, segregated account of $5,000 (if they exercise investment or brokerage discretion) or $10,000 (if they have custody of their clients' funds or securities and/or or mandate the prepayment of advisory fees of more than $500 per client at least six months in advance). Investment advisers choosing option (2) above must annually show a positive net worth by preparing a certified balance sheet that conforms to generally accepted accounting principles applied on a consistent basis.

No comments: