Broker-dealers generally have an obligation to facilitate the transfer of accounts belonging to customers who wish to move their assets and positions from one firm to another. Such transfers generally are handled through the use of the "Automated Customer Account Transfer" system (better known as "ACATS"). Operational difficulties can arise from a variety of factors; e.g., when a customer holds assets or positions at one firm that cannot be transferred to the second firm, or when a customer holds positions in certain account types, such as retirement plans, that require additional documentation.
Firms are specifically prohibited by FINRA Rule 2140 from interfering with the transfer of customer accounts in the context of employment disputes. Conversely, where a departing employee seeks to have his customers transfer their assets to the employee's new firm, FINRA Rule 2273 requires the new firm to send the customers an educational notice as to problems that may arise in such a transfer.
Firms also need to be mindful that account transfer instructions are legitimate and that incoming accounts have been subject to appropriate accounting opening procedures, including AML review.