On March 4, the SEC issued a Risk Alert on compliance with its custody rule for investment advisers and an Investor Bulletin on the rule which is designed to protect advisory clients from theft or misuse of their funds and securities.  The alert comes after a review which identified significant deficiencies in about one-third of firms examined, including: (i) failure to recognize that they have custody; (ii) failure to meet surprise examination requirements; and (iii) failure to satisfy the rule’s qualified custodian requirements.  SEC Release.