Current through Register Vol. 46, No. 15, April 8, 2022
When a pension fund has entered into a custodial arrangement
with a dealer, for the safekeeping of the pension fund's securities
investments, on or before the dealer takes possession of or control of the
securities, the pension fund shall obtain from the dealer a notarized
affidavit, signed by a financial operations principal of the dealer. So long as
such custodial arrangement is maintained, the dealer shall continue to provide
the pension fund with a notarized affidavit by April 30th for each succeeding
year. The notarized affidavit shall include, but not be limited to the
following:
a) A statement that the
dealer is a registered broker-dealer with the U.S. Securities and Exchange
Commission and is a member in good standing with the National Association of
Securities Dealers; and
1) With respect to
securities that are not issued only in book-entry form:
A) All such securities of each pension fund
are either held in safekeeping in a place reasonably free from risk of
destruction or held in custody by a securities depository that is a "clearing
agency" registered with the U.S. Securities and Exchange Commission;
B) The dealer is a member in good standing
with the Securities Investor Protection Corporation;
C) The dealer will send to each pension fund,
no less frequently than each calendar quarter, an itemized statement showing
the moneys and securities in the custody or possession of the dealer at the end
of such period; and
D) An
independent certified public accountant conducts an audit of the dealer, no
less frequently than once each calendar year, that reviews the dealer's
internal accounting controls and procedures for safeguarding securities;
and
2) With respect to
securities that are issued in book-entry form:
A) All such securities of each fund are held
either in a securities depository that is a "clearing agency" registered with
the U.S. Securities Exchange Commission or in a bank that is a member of the
Federal Reserve System;
B) The
dealer records the ownership interest of the funds in such securities on the
broker-dealer's books and records;
C) The dealer is a member in good standing
with the Securities Investor Protection Corporation;
D) The dealer will send to each pension fund,
no less frequently than each calendar quarter, an itemized statement showing
the moneys and securities in the custody or possession of the dealer at the end
of such period; and
E) The dealer's
balance sheet containing a statement of its required net capital computed in
accordance with Rule 15c3-1 ( 17 CFR
240.15c3 - 1 ), under the Securities
Exchange Act of 1934, is audited annually by an independent certified public
accountant, and the dealer's most recent audited balance sheet is furnished to
each pension fund.
b) Representations that the dealer is:
1) Not authorized to act as an investment
adviser for the pension fund; and
2) Not a natural person; and
3) In compliance with the provisions of Rule
15c3-3 ( 17 CFR
240.15c3 - 3 ) under the Securities Exchange Act of
1934.
c) A certified
copy of the dealer's most recent audited balance sheet, including the required
net capital computation.