Amendment to FINRA Proposal on Customer Account Statements (Proposing)

SEC Release No. 34-64969, 74 FR 23912 (SR-FINRA-2009-028)

July 26, 2011

The SEC published for comment an amendment to a FINRA proposal to adopt new FINRA Rule 2231 (Customer Account Statements). The proposed rule is substantially similar to current NASD Rule 2340 and incorporates most of former NYSE Rule 409, each subject to certain significant changes. (Note: Former NASD Rule 2320 and NYSE Rule 409(f) were previously incorporated as FINRA Rule 2232.) The rule generally would require broker-dealers to send a monthly account statement to each customer whose account had activity since its last statement, and at least once every quarter to every customer. The initial proposal received a significant number of critical comment letters questioning the need to move from quarterly account statements to monthly statements, and generally arguing that the increased and often unnecessary cost of sending such statements would harm competition. FINRA generally responded to such concerns by excluding certain types of account activities from the monthly statement requirement, including: (i) when receipt of funds in the account are not from a purchase/sale transaction (including interest/dividends); (ii) the automatic reinvestment of funds pursuant to standing instruction (e.g. dividend reinvestment); (iii) transfers pursuant to a "sweep program." The exceptions are applicable only where telephone/Internet access to customer account information remains available.

Cross References

SEC Release No. 34-59921 (initial proposal)Comments on proposalFINRA Rule 2231 (proposed)NASD Rule 2340 (Customer Account Statements)NYSE Rule 409 (Statements of Accounts to Customers)SEC Release No. 34-63150 (adopting FINRA Rule 2232)