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SEC Tightens Broker/Dealer Client Rules

On the last day of July, the Securities and Exchange Commission (SEC) approved new rules designed to increase protections for investors who turn their money and securities over to broker/dealers registered with the SEC.

Approved by a 3-2 vote, the new rules require broker/dealers to file new reports with the SEC that should result in higher levels of compliance with the regulator’s financial responsibility rules.

“These rules will provide important additional safeguards for customer assets held by broker/dealers,” said Mary Jo White, Chair of the SEC.  “These rules will strengthen the audit requirements for broker/dealers and enhance our oversight of the way they maintain custody of their customers’ assets.”

Broker/dealers must begin to file a quarterly report, called Form Custody, with the SEC and annual reports with SIPC by the end of 2013.  The requirement for broker/dealers to file annual reports with the SEC is effective June 1, 2014.

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