Broker-Dealers: The New Frontier for SEC Enforcement

The SEC adopted new rules designed to increase protections for customers who invest money and securities with broker-dealers.  Recent rulemaking and statements made by the SEC have highlighted the fact that broker-dealer regulation is becoming a growing area of SEC interest.  In connection with Wednesday’s vote, SEC Chair Mary Jo White stated that “[i]nvestors need to feel confident that their money is safe when it’s being held by their broker-dealers… [and] these rules will strengthen the audit requirements for broker-dealers and enhance [the SEC’s] oversight of the way they maintain custody over their customer’s needs.”   The new rules amend the broker-dealer reporting and notification rules codified in Section 17 and Rules 17a-5 and 17a-11 of the Exchange Act.  They also require that the broker-dealer let the SEC review the work-papers of the accountant, if requested.  For more information and to visit our Securities Litigation blog, please click here.