|
Pershing, a clearing firm unit of the Bank of
New York Mellon Corp, violated the rule during 2010 and 2011 and
also failed to have certain adequate supervision systems in
place related to its obligations under the rule, the Financial
Industry Regulatory Authority (FINRA) said. FINRA also censured
Pershing for the violations, the regulator said.
Pershing neither admitted nor denied FINRA's allegations. A
Pershing spokeswoman was not immediately available to comment.
Clearing firms such as Pershing act as intermediaries between
securities brokerages and exchanges. They typically handle
back-office tasks for brokerages, including order processing and
record keeping. They also hold securities for brokerages, also
known as providing custodial services.
The "customer protection rule" at issue in FINRA's action is a
mandate of the U.S. Securities and Exchange Commission. It also
requires that assets be available for distribution in the event
of a brokerage's insolvency.
Pershing's violations of the rule included failing to have
adequate reserves of cash or securities on hand to meet certain
deposit requirements of its brokerage customers, FINRA said. The
rule requires firms that have custody of customer securities to
have a reserve of cash or securities on hand in a bank account
that is at least equal in value to the net cash the broker owes
to customers.
Pershing's deficiencies ranged from $4 million to $200 million,
FINRA said.
(Reporting by Suzanne Barlyn in New York; editing by Chizu
Nomiyama and Matthew Lewis)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
