New Jersey Administrative Code
Title 13 - LAW AND PUBLIC SAFETY
Chapter 47A - BUREAU OF SECURITIES
Subchapter 7 - MISCELLANEOUS
Section 13:47A-7.2 - Custody of clients' funds or securities
Universal Citation: NJ Admin Code 13:47A-7.2
Current through Register Vol. 56, No. 18, September 16, 2024
(a) The term "custody of clients' funds or securities" as used in 49:3-57(e) shall mean holding directly or indirectly, client funds or securities, or having any authority to obtain possession of them or having the ability to appropriate them except as an incident to transactions with or for customers that are promptly consummated by payment or delivery.
(b) Custody of client's funds or securities shall include:
1. Possession of client funds
or securities, (but not of checks drawn by clients and made payable to third
parties), unless received inadvertently and returned to the sender within three
business days of receipt;
2. Any
arrangement (including a general power of attorney and direct fee deduction
arrangements) authorizing or permitting the withdrawal of client funds or
securities maintained with a custodian upon the investment adviser's
instruction to the custodian; and
3. Any capacity (such as general partner of a
limited partnership, managing member of a limited liability company or a
comparable position for another type of pooled investment vehicle, or trustee
of a trust) that gives a supervised person legal ownership of or access to
client funds or securities.
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