SEC tightens client rules for broker-dealers
WASHINGTON (Reuters) - The top securities regulator on Wednesday set new rules to protect clients with cash or securities at securities brokers, requiring more disclosure and safeguards from firms including some of Wall Street's largest.
The Securities and Exchange Commission said the thousands of brokerage firms will need to file a range of new reports with regulators when holding client assets on custody. Companies affected include such names as Goldman Sachs, JP Morgan and Bank of America.
"Investors need to feel confident that their money is safe when it's being held by their broker-dealers," Mary Jo White, Chair of the SEC, said in a statement.
The SEC also amended a set of existing rules for securities brokerages, also known as broker-dealers, to better protect client money including changes to how capital is calculated and documentation and notification requirements.
The agency voted unanimously for these amendments, but was split 3-2 over the new protection rules.
The amendments to the financial responsibility rules for broker-dealers were first proposed in 2007, and the SEC had re-opened the public comment period last year.
Smaller brokerage firms in the past have complained that the extra regulatory burden the SEC rules would impose on them would mean higher costs, asking for delays.
Broker-dealers will be required to begin filing new quarterly reports by the end of 2013, while the requirement to file annual reports with the SEC will be effective as of June 1, 2014, the agency said.
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