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Are Your Customer Accounts in Order? SEC Announces Sweep of Broker-Dealers and Implementation of the Customer Protection Rule Initiative

Posted in Broker-Dealer Regulation, SEC Enforcement

On June 23, 2016, the Securities and Exchange Commission (the “SEC”) announced that it would begin a coordinated effort across divisions to identify potential violations by broker-dealers of Rule 15c3-3 (the “Rule”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As part of this effort, also known as the Customer Protection Rule Initiative (the “CPR Initiative”), the SEC will conduct a targeted sweep of broker-dealers and encourage firms to self-report any potential violations of the Rule. The CPR Initiative is intended to address historical or ongoing violations of Section 15(c)(3) of the Exchange Act and the Rule. The CPR Initiative covers only broker-dealers and provides no assurance that individuals associated with those entities will be offered similar terms if they have engaged in violations of the federal securities laws. The SEC may also recommend an enforcement action against such individuals beyond those available under the CPR Initiative. The SEC, however, did not specify for how long the CPR Initiative would run.

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