The books-and-records rule is unglamorous and quietly decisive. Investment advisers must keep specified records for specified periods and be able to produce them on demand, and an examination often lives or dies on whether the firm can. In a regulator's eyes, a record you cannot produce is a thing that did not happen.
The rule requires a broad set of records: financial and accounting records, records of advice and communications, advertising and performance backup, client agreements, the code of ethics and personal-trading records, and documentation supporting the firm's compliance program, among others. The list is long, and the theme is that the firm must be able to reconstruct what it did and why.
Records must be retained for set periods, often several years, with the earliest years readily accessible, and increasingly they must be maintained in a way that preserves them against alteration. Electronic records bring their own requirements around preservation and reproducibility. Retention is not just about keeping things; it is about keeping them in a producible, tamper-resistant form.
A document request is usually the first move in an examination, and the quality of the response sets the tone. Complete, organized, on-time production signals a firm in control; gaps invite deeper scrutiny. Recordkeeping is the substrate everything else rests on.
Keep it, and be able to hand it over.
Greenridge L&C Advisors is a compliance consultancy, not a law firm. This is general information, not legal advice.