WASHINGTON — Brokerage business at credit unions and banks would be negatively impacted if proposed amendments from the Securities and Exchange Commission's Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information move forward, said the Credit Union Financial Network, an investment services CUSO.
At issue within the regulation is the protocol when a registered representative leaves one brokerage firm for another.
In a May 7 SEC comment letter, Michael Prior, president of CUFN, said independent broker-dealers "own" the client relationship and while wirehouses generally have the same model, advisers are responsible for all or a portion of their expenses as they build their book of business.
At credit unions and banks, Prior said, advisers acknowledge when they take the position that the clients and all related information are the property of the financial institution.
"The financial institutions bare great expense in developing 'their book of business' as it relates to salaries, bonuses, marketing, hardware, software and licensing for the adviser," Prior wrote. "It would not be fair ethically or contractually to allow the advisors to work for a financial institution for five years and then transfer the financial institution's book of business to another firm."
SEC is seeking comment until May 12. The proposal can be found at the following link http://www.sec.gov/rules/proposed/2008/34-57427.pdf.
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