SEC Proposes Deeper Scrutiny Of Broker-Dealers

Wednesday, June 15, 2011 22:37
SEC Proposes Deeper Scrutiny Of Broker-Dealers

Tags: Dodd-Frank | pershing | sec

The U.S. Securities and Exchange Commission proposed expanding scrutiny of how brokerages handle trillions of dollars in client assets in a measure that reflects the enduring regulatory impact of Bernard Madoff’s Ponzi scheme.

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SEC commissioners voted 5-0 yesterday to seek comment on a rule that would increase disclosures required of broker-dealers who hold investor funds, building on a 2009 rule for investment advisers. The measure would require enhanced audits of 300 brokers with custody of client assets and quarterly disclosures from all 5,000 registered firms on how they handle funds.
Existing law requires broker-dealers to be audited each year by a firm registered with the Public Company Accounting Oversight Board. The PCAOB, which is required by the Dodd-Frank Act to start inspecting the audits, established an interim program for the reviews this week. Yesterday’s SEC proposal would expand what the audit watchdog sees in those examinations.
This comes only days after Pershing spoke about the growing B/D compliance burden at the firm’s annual meeting for correspondent and RIA clients. Pershing has been vocal in its outcry against Dodd-Frank and other “misguided policy proposals.”


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