Amendments to Financial Responsibility Rules for Broker-Dealers, SEC Release #: 34-66910 (SEC Proposed Rule, Reopening of Comment Period)

See: 77 FR 27150

The SEC is "reopening," for thirty days, the comment period for a variety of proposed amendments, some of which are quite material, to its net capital, customer protection, books and records, and notification rules for broker-dealers. Among the more material proposals are that (i) a broker-dealer carrying the assets of another broker-dealer, including a non-U.S. broker-dealer, would effectively be required to treat the carried assets as customer assets; and (ii) a prohibition on second liens on a broker-dealer's margin account. The proposals were originally issued by the SEC on March 9, 2007 (Exchange Act Release No. 55431, 72 FR 12862 (Mar. 19, 2007)). The release was seemingly abandoned five years ago—although in fact a number of the proposals have been instituted by other means. Given all of the relevant developments in the past five years, it is somewhat surprising that the SEC would simply "reopen" this release, rather than re-evaluate the various proposals in light of these developments. In any case, the proposed changes are material and firms should consider commenting on them.

Comments Due: Comments should be received on or before June 8, 2012.

Cross References: Exchange Act Rules 15c3-1, 15c3-3, 17a-3, 17a-4 and 17a-11; SEC Release No. 34-55431, 72 FR 12862 (March 19, 2007) (Initial Proposal); Submit comments on S7-08-07; Comments Received; Lofchie's Guide to Broker-Dealer Regulation, Capital Requirements.

For more information about this document, you may contact one of the following Cadwalader attorneys: Steven D. Lofchie.