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Regulation and Compliance > Federal Regulation > SEC

Insurers Applaud SEC Recordkeeping Reg

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NU Online News Service, Nov. 1, 10:16 a.m. — Washington

Insurance companies and agents are praising the Securities and Exchange Commission for issuing a final rule on broker/dealer record keeping requirements that accommodates limited service broker/dealers affiliated with life insurance companies.

Carl Wilkerson, chief counsel for securities with the American Council of Life Insurers, Washington, says the SEC deserves praise for recognizing that not all broker/dealers are full services firms and for not adopting a “one-size-fits-all” approach.

Wilkerson notes that one ACLI member, which he did not name, estimates that had the SEC adopted a less flexible approach to it record keeping rule, it would have cost that company at least $1.5 million annually is extra costs.

David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., adds that the SEC correctly recognizes the differences between brokerage houses and insurance broker/dealers.

Winston especially praises ACLI for its work on this issue.

“ACLI deserves all credit for a very positive outcome in the SEC’s final rules,” Winston says.

Under the SEC rules, broker/dealer offices need not maintain on their premises records needed to assist securities regulators that conduct sales practice examinations.

Instead, the rules state that a broker/dealer be able to produce the records “promptly” upon request of a securities regulator.

The SEC noted in its rule that the term “promptly” is deliberately not defined. For a complex request, the SEC says, the firm and the regulator should discuss a mutually agreeable time frame.

This contrasts from an earlier proposed rule, in which the SEC would have required all local offices where two or more associated persons regularly conduct business to maintain the relevant records.

Wilkerson says this would have placed a particular burden on limited service broker/dealers affiliated with life insurers, which are often small and geographically dispersed.

In addition, in its final rule the SEC eased a supervisory requirement that appeared in the proposed rule.

Initially, the SEC wanted a “registered principal” in each office to be responsible for supervising the records.

However, in its final rule, the SEC expanded the definition of “principal” to include anyone who as been designated supervisory responsibility for the firm or its associated persons.


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