It is a smart business decision for all investment managers to formally require that all movements of money be authorized by the signature of two senior officers of the manager. This will not require that checks are signed by two individuals, but that the authorization to sign a check or commence a wire transfer will require a written authorization by two senior officers or executives. This requirement should be adopted as a control mechanism in a manager’s compliance manual.
In addition to being a smart business concept that will likely be “attractive” to potential clients, we believe that the SEC will likely look favorably on a manager which proactively adopts such a control mechanism (based upon our prior experience with the SEC staff during audits).
Should you decide to adopt this control mechanism, you should:
- Appoint the two required signatories in writing; and
- Provide written notification to any financial institutions (at which the manager and/or its advisory clients have accounts) of the authorization requirements.