Defines.pdf

The US Securities and Exchange Commission provides guidance on the application of Rule 204A-1, which requires registered investment advisers to maintain and enforce written policies and procedures to prevent the misuse of material nonpublic information. The rule includes a reporting exception for access persons' securities held in accounts over which they have "no direct or indirect influence or control." The staff clarifies that simply providing a trustee or third-party manager with management authority or discretionary investment authority is insufficient to rely on the reporting exception. To establish a reasonable belief that an access person had no direct or indirect influence or control, advisers may implement additional controls, such as obtaining information about the trustee or manager's relationship to the access person, periodic certifications, and sample reports on holdings and transactions. The staff encourages advisers to consider this guidance when determining whether an access person had direct or indirect influence or control over a trust or account.