|
 The model fee disclosure, introduced on Sunday by the North American
Securities Administrators Association (NASAA), aims to standardize
how U.S. firms present information about everything from annual
brokerage account fees to charges for falling below minimum
balances.
Service and maintenance fees have long been a source of confusion
for investors. Among the problems: there is little consistency among
companies about how they disclose such fees, which some may also
charge for postage and transferring accounts to other firms.
NASAA, a group of securities regulators from U.S. states, Canada and
Mexico, unveiled the new standardized disclosure format at its
annual meeting in San Juan, Puerto Rico. The group collaborated with
securities industry trade groups and Wall Street's industry-funded
watchdog, the Financial Industry Regulatory Authority (FINRA), among
others, to develop the simplified format.
NASAA officials, who have studied disclosures from thousands of
companies since last year, found that some firms had buried the
information within 40-page documents, while others used charts that
did not make sense, Carol Foehl, associate director of the
Massachusetts Securities Division, in a presentation about the
group's project.
"If this exercise was difficult for the regulators, how was the
average investor supposed to find the information?" said Foehl.
Many investors are unaware that their brokerages charge fees to
maintain and service brokerage accounts. Nearly 30 percent of almost
1,100 investors who participated in a recent NASAA survey said their
firm did not impose such charges. Another 25 percent said they did
not know whether they were being charged.
[to top of second column] |
More than half of investors who were aware of the fees did not know
the amounts their firms charged, NASAA said.
The model disclosure, which is voluntary for companies, is a
plain-language document designed so that investors can easily
eyeball the amounts for different types of service and maintenance
fees, as well as their frequencies. NASAA recommends that companies
include a link on their website home pages that directs users to the
disclosure.
Morgan Stanley is among the first firms to use the new disclosure,
which it was able to customize for various types of clients and
accounts, James Fontanilla, an executive director with the firm's
legal and compliance department, said on Sunday.
(Editing by Eric Walsh and Nick Zieminski)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
