SEC Rule 206(4)-2

The rule also requires the firm to have a reasonable basis for believing that the qualified custodian is sending account statements on at least a quarterly basis to the firm’s clients.

Also requires the independent verification by a public accountant of the existence of client funds and securities.

The independent verification must occur on at least an anual basis at a time “that is chosen by the accountant without prior notice or annoucnement to you and that is irregular from year to year.

Exceptions to this rule include those covering:

• Shares of mutual funds
• Some privately offered securities
• Fee deduction
• Limited partnerships subject to annual audit
• Registered investment companies
• Certain related persons