Securities Industry and Financial Markets Association

SEC No-Action Letter

In a letter to SIFMA, the SEC Division of Market Regulation extended, with modifications, relief previously granted under Exchange Act Rule 17a-8 for broker-dealers to rely upon registered investment advisers to perform some or all of its Customer Identification Program obligations.

Among other things, the new letter allows a broker-dealer to rely on an adviser when such reliance is "reasonable under the circumstances." The letter specifies that reasonable reliance requires a BD to undertake "appropriate due diligence" commensurate with the adviser's anti-money laundering risk, and that such due diligence should be undertaken at the outset of a BD's relationship with the adviser and updated during the course of the relationship, as appropriate. The letter states that it will take effect after May, 11, 2011, and until then, relief granted in a 2010 no-action letter will remain in effect.

Please contact any of the following Cadwalader attorneys if you have any questions about this item:

Steven Lofchie; [email protected]

Jeffrey Robins; [email protected]

Maurine Bartlett; [email protected]

Glen Barrentine; [email protected]

Date

January 11, 2011

Cross References (links may require a Cabinet subscription)

Jan. 2010 No-Action Letter

Exchange Act Rule 17a-8