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News May 30, 2005 Issue

Skandia Gets Qualified Custodian Pass

Advisers authorized to withdraw advisory fees from client funds held in separate accounts underlying variable annuities issued by American Skandia Life Assurance will not run afoul of the Advisers Act custody rule, even though Skandia is not technically a "qualified custodian" under the rule.

So said the SECís Division of Investment Management in a May 16 no-action letter. Skandia had asserted that its role was akin to that of a mutual fund transfer agent. The SEC has permitted fund TAs to act in lieu of qualified custodians, since they adequately protect client funds and securities.