IM No-Action Letter to ICI on Custody for 529 Plans

The SEC Division of Investment Management stated that it would not recommend enforcement against an adviser under Advisers Act Section 206(4) (Prohibited Transactions by Investment Advisers) and Rule 206(4)-2 ("Custody Rule") if the adviser treats a state-created 529 plan trust that is a college savings plan for which the adviser is a Program Manager as a "pooled investment vehicle" for purposes of the Custody Rule. In light of the relief granted by the letter, advisers are not required to have a surprise audit on their activities relating to 529 plans. The relief, however, is subject to detailed conditions (set out on pages 7-8 of the letter), including as to the required audit and financial reporting procedures.

View letter here (links externally to SEC website).
See also: Incoming Letter.

See next item.