SEC Eyes Broker-Dealers Over Subaccount Risks

Law360, New York (September 29, 2011, 8:32 PM EDT) -- The U.S. Securities and Exchange Commission put broker-dealers on notice Thursday that they will face scrutiny if they offer master/subaccounts to customers because of an increased risk that such accounts can be used for illegal activities.

“Our national examination staff intends to scrutinize the controls and procedures at broker-dealers that offer market access to master/subaccount customers,” said Carlo di Florio, director of the SEC’s Office of Compliance Inspections and Examinations. “When a broker-dealer offers master/subaccounts, this includes an obligation to reasonably design controls and procedures that...
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