SEC Extends For Two Years Principal Trading Rule For Non-Discretionary Accounts Hot
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This happened after the so-called Merrill Lynch was thrown out by a federal court. The Merrill Lynch rule exempted brokers from the Investment Act of 1940.
The rule has been extended twice before and a five-year extension was pushed for in comment letters from SIFMA (Securities Industry and Financial Markets Association) and FSI (Financial
Services Institute) the SEC received last month.
fi360, the fiduciary firm, said the extension should only be for six months. It said the SEC has no idea how many firms use the exemption, how many problems arise from principal trading, and the possible costs those problems are incurring for investors.
The SEC said that ADV data showed that 10 firms engage in principal trading and that those firms have a total of 3.5 million non-discretionary accounts in which principal trading may be involved.
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