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SEC Votes to Close Down Non Y2K-Compliant Brokerages.

The Securities and Exchange Commission has approved new rules that will allow it to begin shutting down brokerage firms that haven't demonstrated Y2K compliance by the end of next month. Under the plan, which was ratified by a unanimous vote, the SEC will shut down non-compliant companies by December 1. While August 31 has been set as the target date for Y2K readiness, some firms will be given an extension if they can offer assurance that they will be ready by November 15.

The SEC says the move was made because the lack of readiness by a few firms could have adverse consequences for countless others. Still, it estimates that only about 1% of the 3,900 brokerage houses covered by the new rules will fail to achieve Y2K compliance in a timely manner. The vast majority have already passed tests carried out by the Securities Industry Association earlier this year and only about 50 firms are expected to miss the August deadline.

Any companies that run afoul of the new rules would be required to transfer customer accounts and assets to a compliant firm. The SEC said it wouldn't oversee such transfers, but instead expects compliant firms to solicit the accounts themselves. Publicly- traded companies have been required by the SEC since 1997 year to disclose information about their Y2K readiness as well as detailed accounts of the costs associated with Y2K-related work.
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Publication:Computergram International
Geographic Code:1USA
Date:Jul 28, 1999
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