Product Brief

SEC Service Provider Due Diligence and Oversight Proposal

On October 26, 2022, the SEC proposed new rules requiring Registered Investment Advisors (RIA) to conduct due diligence on any service providers to whom a firm is considering outsourcing specific functions. Due diligence must satisfy SEC-prescribed criteria. Moreover, the rules would call for firms to maintain oversight of their service providers, and document and retain records of their oversight activity. Although still in the proposal stage, firms should prepare for the likely adoption of this rule.