Broker-Dealers must comply with the SEC's extensive amendments to broker-dealer books and records rules starting May 2, 2003. The amendments clarify and expand recordkeeping requirements for purchase and sale documents, customer records, associated person records, customer complaints, communications with the public, and supervisory procedures.

The SEC backed off slightly on one of the most controversial provisions in the proposed rules. The proposed rules would have required firms to maintain specified records at each local office. But broker-dealers had criticized that provision as costly and impractical. They feared that decentralizing records by maintaining them at local offices would compromise their recordkeeping controls and supervision.

The new provision requires that firms produce records "promptly" at the local office to which they relate upon request of a regulator. The SEC deliberately left "promptly" not defined but did provide guidance in the amending release.

The SEC said that a regulator's request for records should be filled the same day that the regulator makes the request. The "promptly" standard does not change regardless of where a firm maintains its records or whether it stores them on paper or electronically. An "unusually large or complex" record request requires the firm and regulator to reach a mutually agreeable time to provide the records the regulator wants to see. But the Commission cautioned that review by the firm's compliance office is not a valid reason for delay.

The SEC announced the amendments in October 2001 after seeking public comments on a proposal in 1996 and a reproposal in 1998.

Click here for a FREE list of new books and records rules color-coded to distinguish existing and new requirements.

More detailed analysis of these amendments to broker-dealer books and records rules will be found in the upcoming CCH publication, Plain English Guidebook to SEC Recordkeeping and Retention. If you wish to be notified when this title is available, please complete this Additional Information Request Form.

References

Broker-Dealer Books and Records Rules
17 CFR §240.17a-3
                    CCH Federal Securities Law Reporter ¶26,154
                    CCH Federal Securities Laws, Regulations, & Forms ¶24,021

17 CFR §240.17a-4
                    CCH Federal Securities Law Reporter ¶26,155
                    CCH Federal Securities Laws, Regulations, & Forms ¶24,031