Third Party Checks

I have had different answers to the following issue:

Checks received in our office made payable to a clients account or the custodian (not sent by the client; ie: class action proceeds) and then deposited in clients account is then considered having custody. We always understood if a check was made payable to an account or a custodian that the this was not custody.

Im wondering what others thoughts are on this or if you have had any conversations with the SEC on this issue?

Thank you.


  • My experience has always been if you or your Firm can not exercise control or disbursement of funds then custody does not exist. If the funds are made payable to the client's account then I do not believe custody exists.

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