This paper discusses recommendations for, and sample contractual provisions for use in, drafting Managed Account agreements in a manner that avoids compliance pitfalls, demonstrates compliance with applicable securities laws and promotes operational efficiency. In doing so, this paper reviews the basic legal requirements for investment management agreements and Managed Account programs, discusses how the suitability, best execution, trade allocation, custody, proxy voting, disclosure and recordkeeping responsibilities and practices of sponsors and managers of Managed Accounts are often addressed, considers common pitfalls created through drafting of Managed Account agreements, and poses questions for MMI members to help evaluate their Managed Account agreements.
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