What Is SEC Form N-17f-2?
SEC Form N-17f-2 is a filing with the Securities and Trade Price (SEC) that must be submitted via investment firms that have custody of securities or identical investments. The investment company is had to retain an independent public accountant to ensure the company’s securities and identical investments that are held via precise examination thrice all over every fiscal 12 months.
Key Takeaways
- SEC Form N-17f-2 is a regulatory report titled, Certificate of Accounting of Securities and Identical Investments inside the Custody of Keep watch over Investment Companies.
- This fashion must be completed and filed via investment firms that have custody of securities or identical investments on behalf of clients.
- The form must be certified via an independent public accountant, who may be required to investigate cross-check the corporate’s securities positions thrice in step with 12 months.
Understanding SEC Form N-17f-2
SEC Form N-17f-2 is ceaselessly known as “Certificate of Accounting of Securities and Identical Investments inside the Custody of Keep watch over Investment Companies.” It is required via Rule 17f-2 beneath the Investment Company Act of 1940. The purpose of this way is for the SEC to be sure that the certificate is accurately attributed to the investment company and that the investment company’s custodial accounts snatch exactly the securities that are reported as held in consumers’ accounts.
The accountant involved must get in a position a certificate bringing up that the examination has came about with an overview of the examination. Keep watch over signs the form and submits it to the SEC in conjunction with the independent accountant’s attestation.
The accountant must also be an independent auditor, who is a licensed public accountant (CPA) or chartered accountant who examines the financial information and business transactions of a company with which he is not affiliated.
An independent auditor is typically used to keep away from conflicts of interest and to make sure the integrity of performing an audit. Unbiased auditors are incessantly used—or even mandated—to give protection to shareholders and conceivable investors from the occasional fraudulent or unrepresentative financial claims made via public firms. The use of independent auditors grow to be further important after the implosion of the dotcom bubble and the passage of the Sarbanes-Oxley Act (SOX) in 2002.
Key Subsections of Rule 17f-2
Rule 17f-2 requires that securities must be deposited via an investment company inside the safekeeping of a monetary establishment or other company whose functions and physically facilities are supervised via a federal or state regulator. Such securities on deposit must be physically segregated all the time. Alternatively, securities that are collateralized, hypothecated, pledged, or located in escrow for a loan, or securities in transit in connection with the sale, exchange, redemption or other transaction that results in the pending business of physically ownership do not have to be deposited for safekeeping during the investment company.
Each and every different essential subsection is the identification of the people licensed to have get right to use to the deposited securities. Rule 17f-2 moreover details the correct procedures to be followed for the deposit and withdrawal of securities. After all, the guideline of thumb stipulates that independent examinations via a public accountant are performed no less than thrice in a fiscal 12 months, with no less than two of them taking place without prior perceive to the investment company.
