November 15, 1996
TO: COMPLIANCE ADVISORY COMMITTEE No. 33-96
SEC RULES COMMITTEE No. 121-96
RE: PROPOSED BROKER-DEALER BOOKS AND RECORDKEEPING REQUIREMENTS
______________________________________________________________________________
The Securities and Exchange Commission has proposed amendments to the broker-
dealer books and records rules (Rules 17a-3 and 17a-4 under the Securities Exchange Act of
1934) in response to certain concerns raised by members of the North American Securities
Administrators Association (NASAA) about the location of broker-dealer books, the lack of
uniformity in interpreting the books and records requirements and the need for additional
records to improve oversight of the industry and increase investor protection. A copy of the
Commissions release is attached.
The proposed amendments would require broker-dealers to maintain, among other
things, (1) additional records concerning associated persons, (2) an account form for each
customer account and (3) files of written materials relating to customer complaints and written
memoranda of oral complaints alleging certain types of fraud and theft. The proposed account
form would require background information about a client (e.g., age, marital status, education
level, employment information, annual income, net worth), as well as a designation of the
customers investment objectives. The Commission has proposed a one-year updating
requirement with respect to the designated investment objectives, but has solicited comments
on whether there are less burdensome alternatives that would nevertheless provide broker-
dealers and regulators with a reasonably current indication of each customers investment
objectives. In addition, recognizing that some broker-dealers may engage in certain businesses
of a type that render unnecessary the account form requirements being proposed, the
Commission has expressly solicited suggested standards for the exemption of categories of
broker-dealers from these requirements.
The proposed amendments also would modify the current record retention
requirements in Rules 17a-4(a) and 17a-4(b) and the record production and organization
requirements in Rule 17a-4(j), and would adopt a new requirement that broker-dealers make
available certain records in each of their local offices.
Comments are due on the proposed broker-dealer books and records amendments by
December 27, 1996. If you have any comments on these amendments that you would like the
Institute to consider including in a possible comment letter, please contact me by December
4, 1996. My direct number is 202/326-5824, the fax number is 202/326-5827 and my e-mail
address is amy@ici.com.
Amy B. R. Lancellotta
Associate Counsel
Attachment