The practice of rolling assets from multiple clients or other traders into a single custody account has the SEC nervous enough to launch an entire new series of official warnings.
Many firms set up pooled "master" accounts with a broker-dealer or custodian to get better efficiency or pricing. But since these vehicles are opaque from the outside, the SEC is worried that they can be used to front a wide range of abusive practices.
The very first SEC "National Exam Risk Alert" deals exclusively with the dangers that master account structures represent. Since the actual owners of the pooled assets are only recorded in the master account holder's sub-account ledgers, they can conceal laundered money, insider trading, or excessive leverage on the part of one or more sub-account holders.
Furthermore, since ownership is not necessarily transparent, the SEC is worried that these account strutcures create opportunities for Madoff-style confusion and obfuscation.
The regulators are going after the broker-dealers that support master and sub-accounts in order to ensure that they get all the necessary information from their customers about the individuals and institutions that actually own the assets.
In the past, investment advisors have gotten a pass because they naturally set up omnibus clearing and custody accounts for all their managed assets.