Customer Account Statement Proposal
Summary
SIFMA provided comments to the Securities and Exchange Commission (SEC) on the revised proposal to adopt consolidated Financial Industry Regulatory Authority (FINRA) Rule 2231 (Customer Account Statement Proposal).
SIFMA understands and fully supports FINRA in its effort to protect sensitive customer information from unauthorized persons; however, SIFMA continues to have concerns with the Proposal and requests sufficient time to implement a final rule.
Excerpt
October 27, 2021
VIA ELECTRONIC SUBMISSION
Vanessa A. Countryman, Secretary
Securities and Exchange Commission
100 F Street, NW
Washington, DC 20549-1090
Re: SR-FINRA-2021-024: Proposed Rule Change to Amend FINRA Rule 2231 (Customer Account Statements)
Dear Ms. Countryman:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the revised proposal to adopt consolidated Financial Industry Regulatory Authority (“FINRA”) Rule 2231 (“Customer Account Statement Proposal” or the “Proposal”).2 As stated when our original comments were submitted in 2014 in response to Regulatory Notice 14-35, SIFMA understands and fully supports FINRA in its effort to protect sensitive customer information from unauthorized persons.3 However, SIFMA continues to have significant concerns with the Proposal and requests sufficient time to implement a final rule.
1. Supplemental Material .02 (Transmission of Customer Account Statements to Other Persons or Entities)
Of greatest concern to SIFMA is Supplemental Material .02’s proposed requirement to continue to send duplicate account statements to customers in contravention to their express wishes or the instructions of a person with appropriate legal authority over the customer’s affairs, including an Agent or Attorney-in-Fact appointed under a valid Durable or Springing Power of Attorney (“POA”). SIFMA appreciates the change FINRA made that will allow a court-appointed fiduciary (e.g., Guardian or Conservator) to furnish the member firm with written instructions to cease sending account statements to a customer, but this change did not go far enough to address the concerns raised in our 2014 comment letter. Not allowing an exception for Agents or Attorneys-in-Fact appointed under valid POAs to provide written instructions to cease sending statements to customers, including those who are or become vulnerable or disabled, may result in an increased risk of customers’ privacy being violated, account compromises, and/or identity theft. The exception to the continuous delivery requirement should be expanded to include an Agent or Attorney-in-Fact appointed under a valid Durable or Springing POA.
As stated in our 2014 comment letter, the POA relationship is a powerful one, in which a formal legal document drafted and effected pursuant to state law outlines the scope and limits of an agent’s power under the POA. In not allowing the Agent or Attorney-in-Fact to act in the legal capacity specifically granted to them by the customer, the Proposal erodes the legal authority of an Agent or Attorney-in-Fact in a manner that may be inconsistent with applicable state laws. Further, the Proposal impedes and potentially harms customers for whom the POA is a crucial legal structure for protecting his or her legal rights and finances.
1 SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly one million employees, we advocate for legislation, regulation, and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. With offices in New York and Washington, D.C., SIFMA is the U.S. regional member of the Global Financial Markets Association (GFMA).
2 Proposed Rule Change to Amend FINRA Rule 2231 (Customer Account Statements), Rel. No. 34-93215, SR-FINRA-2021-024 (Sept. 30, 2021), 86 FR 55641 (Oct. 6, 2021).
3 SIFMA Comment Letter on RN 14-35, dated Nov. 14, 2014, https://www.finra.org/sites/default/files/notice_comment_file_ref/sifma-1435_0.pdf