How can I be certain that my brokerage account statements are accurate if you are both the custodian of my account and the adviser of my investments?
As an investment adviser registered with the Securities and Exchange Commission, Wealthfront is subject to Rule 206(4)-2 (the “Custody Rule”) of the Investment Advisers Act of 1940. In 2009 the SEC amended the Custody Rule because of several cases involving fraud committed by brokers and investment advisers, most notably Bernie Madoff.
One noteworthy change requires registered investment advisors who have custody of their clients' assets, as Wealthfront does, to hire an independent auditor to conduct a surprise examination to verify that client funds and securities are held by an entity that qualifies as "qualified custodian" under SEC rules and to verify that the qualified custodian is maintaining the assets as required by the SEC. This surprise examination must be conducted at a time that is chosen by the independent auditor without prior notice to Wealthfront, at a different time each year.
We have engaged Ernst & Young, a global leader in assurance, tax, transaction, and advisory services, to perform this audit. Should Ernst & Young find any material discrepancies during the course of its examination, they would be required to notify the SEC within one business day of the finding.
This communication has been prepared solely for informational purposes only. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security or a financial product. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
Wealthfront offers a free software-based financial advice engine that delivers automated financial planning tools to help users achieve better outcomes. Investment management and advisory services are provided by Wealthfront Advisers LLC, an SEC registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC, a member of FINRA/SIPC.
Wealthfront, Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation.
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