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Industry Spotlight > Broker Dealers

Independent BDs Tell SIPC to Drop Excessive Fees Levied Post Madoff

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The National Association of Independent Broker/Dealers (NAIBD) is warning the Securities Investor Protection Corp. (SIPC) that if it fails to decrease the annual fees it boosted significantly on small and medium-sized broker-dealers after the Bernie Madoff Ponzi scheme, NAIBD will take the issue to Congress.

Lisa Roth, chair of the Member Advocacy Committee (MAC) representing the NAIBD, says that she—along with a member of the Financial Industry Regulatory Authority’s (FINRA) small firm advisory board—will be meeting with SIPC’s CEO on March 31 in an effort to persuade SIPC to “back down” on the astronomical fee increase it began charging small and medium-sized firms in 2010.

Post-Madoff, “SIPC assessments have skyrocketed, hitting small firms particularly hard, especially the 1,000 or so firms whose revenues are primarily derived from services not covered by SIPC, such as placement agents, consultative mergers and acquisitions or private placement firms,” Roth told AdvisorOne on Wednesday. SIPC's charter is to intervene in the event a firm goes bankrupt and securities or other assets are missing, Roth continues, so “it’s a stretch to assess fees to firms that operate under contract, have no customers, hold no assets.".

Roth, who’s CEO of Keystone Capital Corp. in San Diego, says her firm’s annual SIPC fee went from $150 annually to a whopping $3,000. While Roth says she believes NAIBD’s efforts to have SIPC drop the fee will likely be “successful,” if they aren’t, she says, “I will take this issue to Congress.”


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