Memo #
8446
DRAFT COMMENT LETTER ON PROPOSED BROKER-DEALER BOOKS AND RECORDKEEPING REQUIREMENTS
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* See Memorandum to SEC Rules Committee No. 121-96, dated November 15, 1996.
December 9, 1996
TO: SEC RULES COMMITTEE No. 128-96
RE: DRAFT COMMENT LETTER ON PROPOSED BROKER-DEALER BOOKS AND
RECORDKEEPING REQUIREMENTS
______________________________________________________________________________
As we previously reported, the Securities and Exchange Commission has proposed
amendments to the broker-dealer books and records rules under the Securities Exchange Act of
1934.* Attached is a draft Institute comment letter on the proposed amendments.
The Institutes letter focuses solely on proposed Rule 17a-3(a)(16) under the Exchange
Act, which would require broker-dealers to maintain an account form for each customer
account. The account form would require detailed background information about a customer,
as well as a designation of the customers investment objectives. Based on the nature of the
information that would be required, it appears that the purpose of this requirement is to
facilitate oversight of the suitability of broker-dealer recommend securities. Recognizing that
some broker-dealers may engage in certain businesses of a type that render unnecessary the
account form requirements being proposed, the Commission expressly solicited suggested
standards for the exemption of categories of broker-dealers from these requirements. The
Institutes letter recommends that broker-dealers who serve as underwriters of investment
companies and who do not recommend securities be exempt from the proposed rule. The letter
asserts that exempting these "limited purpose" broker-dealers would not in any way undermine
the apparent objective of the proposed rule inasmuch as they do not make recommendations to
the investing public.
Comments on the proposed amendments to the broker-dealer books and records
requirements are due to the SEC by December 27, 1996. Please provide me with your
comments by Wednesday, December 18, 1996. My direct number is 202/326-5824 and my e-
mail address is amy@ici.com.
Amy B.R. Lancellotta
Associate Counsel
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