Comment Deadline Set for SEC Proposal to Monitor Outsourced Investment Advisory Services

Comments on an SEC proposal to establish minimum standards for outsourcing investment advisory services and related form amendments are due by December 27, 2022. The Notice was published in the Federal Register.

As previously covered, the proposal would implement baseline due diligence requirements and monitoring obligations for advisers that outsource covered functions to a third-party service provider. The proposal would also require advisers to provide reasonable justification for outsourcing the service to a particular third party, periodically monitor performance by the third-party service provider and keep records on the third-party agreement. The proposal would also revise Form ADV to require advisers to provide information on the third-party service provider, the function that is being outsourced and the risks involved.