FINRA Requests Comments on Revised Proposal Regarding Customer Account Statements (Reg. Notice 14-35) (with Lofchie Comment)

FINRA issued a regulatory notice requesting comment on a revised proposal to adopt FINRA Rule 2231 ("Customer Account Statements").

The rule proposal would transfer, largely unchanged, current NASD Rule 2340 ("Customer Account Statements") and incorporate NYSE Rule 409 ("Statements of Accounts to Customers") into FINRA Rule 2231. The key changes in the revised proposal (i) maintain the quarterly delivery requirement in the current rule (that is, the rule would not require the monthly delivery of statements); and (ii) allow customers to direct the transmission of customer account statements and other documents to third parties, provided that the firm sends duplicates of such account statements and other documents directly to the customer. The rule generally would not require firms to deliver statements to customers who transacted on a DVP/RVP basis.

Comments must be submitted by October 31, 2014.

Lofchie Comment: Firms should review the rule proposal closely, as this is the kind of rule requirement that inevitably raises difficult operational questions. One example of such a question might be: should a firm be required to deliver statements as to deliver-out repo and securities lending transactions even if the firm does custody business separately for the same customer?

See: Regulatory Notice 14-35.