--- title: "Custody of Client Accounts: Does \"Screen Sharing\" Give Rise to a Custody Claim?" description: "Custody of Client Accounts: Does \"Screen Sharing\" Give Rise to a Custody Claim?" --- [![Jacko Law Group, PC - Securities Law](https://resources.jackolg.com/hubfs/Jackolawgroup%20February2018/image/brand.png)](http://www.jackolg.com/) Call Today for a Consultation San Diego 619-298-2880 San Francisco 415-766-3599 Los Angeles 213-631-2549 Menu [Contact](http://www.jackolg.com/Contact.shtml) - [Home](http://www.jackolg.com/) - [Firm Overview](http://www.jackolg.com/Firm-Overview/) - [Professionals](http://www.jackolg.com/Professionals/) - [Events](http://www.jackolg.com/Events.shtml) - [News](http://www.jackolg.com/News-Room/) - [Blog](http://www.jackolg.com/blog/) - [Videos](http://www.jackolg.com/Videos.shtml) - [Contact](http://www.jackolg.com/Contact.shtml) # Understand. Define. Achieve. 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According to Rule 206(4)-2 of the Investment Advisers Act of 1940 (the “Act”), the Securities and Exchange Commission (“SEC”) defines “custody” as “…holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.” This definition gives a broad interpretation as to what constitutes custody, and leaves several grey areas for advisers to try to elucidate. Recently [Charles Schwab published an article](http://content.schwab.com/email/as/advisornews/articles/continuing_custody_quandary_2013_0306.html) on one such area, stating that advisers who have access and login credentials to their client’s online accounts are generally deemed to have custody, if the custodian’s website permits the withdrawal and transfer of funds (regardless of whether the adviser is making such transfers or if the client allowed/disallowed such activities). In taking this a step further, what would be the outcome if an adviser did not have a client’s login credentials, but did the adviser utilize a “screen sharing” application, whereby both the client and the adviser have the ability to view the client’s online account, and each have access to make withdrawals/transfers to that account simultaneously? While the SEC has not specifically addressed this practice in its [Custody FAQs](http://www.sec.gov/divisions/investment/custody_faq_030510.htm), consider the similar application of how may custody apply in the situation whereby the adviser is given hard copy statements of assets held away from the adviser, and the client requests guidance on their portfolio holdings. In this case, the adviser would not be deemed to have custody since the adviser, “did not have the ability to withdraw \[or transfer\] funds”[\[1\]](https://resources.jackolg.com/Marketing/JLG%20Marketing/JLG%20Blog/BLOG%20-%20Custody%20of%20Client%20Accounts%20Does%20Screen%20Sharing%20Give%20Rise%20To%20a%20Custody%20Claim.docx#_ftn1) away from the client’s account. Conversely, should login credentials be provided to the adviser in order for the adviser to view the client’s account in order to provide similar adviser, it could be construed that the adviser is deemed to have custody, for then the adviser would have the *ability* to withdraw funds from a client’s online account. This is a key differential that should be considered. In its FAQ, the SEC goes on to state that whether an adviser *does* or *does not* have the client’s authority to withdraw or transfer assets of such accounts is irrelevant. The mere fact that the adviser has the ability to make such changes is the focal point. As such, in a screen sharing scenario, if the adviser has the ability to make a withdrawal or transfer client funds, this would likely be deemed as having custody for purposes of Rule 206(4)-2 of the Act, subjecting the adviser to the reporting and auditing requirements therein. For further information on this, or other related topics, please contact us at [info@jackolg.com](mailto:info@jackolg.com) or (619)298-2880. --- [\[1\]](https://resources.jackolg.com/Marketing/JLG%20Marketing/JLG%20Blog/BLOG%20-%20Custody%20of%20Client%20Accounts%20Does%20Screen%20Sharing%20Give%20Rise%20To%20a%20Custody%20Claim.docx#_ftnref1) For more information, please visit [http://www.sec.gov/divisions/investment/custody\_faq\_030510.htm](http://www.sec.gov/divisions/investment/custody_faq_030510.htm).   ### Legal Tip Archive - [September 2011 (5)](https://resources.jackolg.com/archive/2011/09) - [April 2014 (5)](https://resources.jackolg.com/archive/2014/04) - [August 2014 (5)](https://resources.jackolg.com/archive/2014/08) - [September 2015 (5)](https://resources.jackolg.com/archive/2015/09) - [August 2011 (4)](https://resources.jackolg.com/archive/2011/08) - [October 2011 (4)](https://resources.jackolg.com/archive/2011/10) - [June 2012 (4)](https://resources.jackolg.com/archive/2012/06) - [July 2012 (4)](https://resources.jackolg.com/archive/2012/07) - [August 2012 (4)](https://resources.jackolg.com/archive/2012/08) - [October 2012 (4)](https://resources.jackolg.com/archive/2012/10) - [November 2012 (4)](https://resources.jackolg.com/archive/2012/11) - [January 2013 (4)](https://resources.jackolg.com/archive/2013/01) - [March 2013 (4)](https://resources.jackolg.com/archive/2013/03) - [April 2013 (4)](https://resources.jackolg.com/archive/2013/04) - [May 2013 (4)](https://resources.jackolg.com/archive/2013/05) - [June 2013 (4)](https://resources.jackolg.com/archive/2013/06) - [September 2013 (4)](https://resources.jackolg.com/archive/2013/09) - [October 2013 (4)](https://resources.jackolg.com/archive/2013/10) - [January 2014 (4)](https://resources.jackolg.com/archive/2014/01) - [February 2014 (4)](https://resources.jackolg.com/archive/2014/02) - [March 2014 (4)](https://resources.jackolg.com/archive/2014/03) - [May 2014 (4)](https://resources.jackolg.com/archive/2014/05) - [June 2014 (4)](https://resources.jackolg.com/archive/2014/06) - [July 2014 (4)](https://resources.jackolg.com/archive/2014/07) - [December 2014 (4)](https://resources.jackolg.com/archive/2014/12) - [January 2016 (4)](https://resources.jackolg.com/archive/2016/01) - [November 2011 (3)](https://resources.jackolg.com/archive/2011/11) - [December 2011 (3)](https://resources.jackolg.com/archive/2011/12) - [January 2012 (3)](https://resources.jackolg.com/archive/2012/01) - [February 2012 (3)](https://resources.jackolg.com/archive/2012/02) - [April 2012 (3)](https://resources.jackolg.com/archive/2012/04) - [May 2012 (3)](https://resources.jackolg.com/archive/2012/05) - [September 2012 (3)](https://resources.jackolg.com/archive/2012/09) - [December 2012 (3)](https://resources.jackolg.com/archive/2012/12) - [July 2013 (3)](https://resources.jackolg.com/archive/2013/07) - [August 2013 (3)](https://resources.jackolg.com/archive/2013/08) - [November 2013 (3)](https://resources.jackolg.com/archive/2013/11) - [December 2013 (3)](https://resources.jackolg.com/archive/2013/12) - [January 2015 (3)](https://resources.jackolg.com/archive/2015/01) - [February 2015 (3)](https://resources.jackolg.com/archive/2015/02) - [March 2015 (3)](https://resources.jackolg.com/archive/2015/03) - [July 2015 (3)](https://resources.jackolg.com/archive/2015/07) - [August 2015 (3)](https://resources.jackolg.com/archive/2015/08) - [November 2015 (3)](https://resources.jackolg.com/archive/2015/11) - [February 2016 (3)](https://resources.jackolg.com/archive/2016/02) - [March 2012 (2)](https://resources.jackolg.com/archive/2012/03) - [February 2013 (2)](https://resources.jackolg.com/archive/2013/02) - [October 2014 (2)](https://resources.jackolg.com/archive/2014/10) - [November 2014 (2)](https://resources.jackolg.com/archive/2014/11) - [April 2015 (2)](https://resources.jackolg.com/archive/2015/04) - [May 2015 (2)](https://resources.jackolg.com/archive/2015/05) - [June 2015 (2)](https://resources.jackolg.com/archive/2015/06) - [October 2015 (2)](https://resources.jackolg.com/archive/2015/10) - [December 2015 (2)](https://resources.jackolg.com/archive/2015/12) - [July 2011 (1)](https://resources.jackolg.com/archive/2011/07) - [September 2014 (1)](https://resources.jackolg.com/archive/2014/09) see all #### News - [Legal Tips](http://www.jackolg.com/News-Room/) - [Publications](http://www.jackolg.com/News-Room/Publications.shtml) - [Blog](http://www.jackolg.com/blog/) [Email Us For A Response](http://www.jackolg.com/Contact.shtml) #### How Can We Help? 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