The “risk-assessment unit” of New York Stock Exchange Regulation issued a memo today to remind member organizations of their duty not to screw clients out of hard-earned 401(k) money.
After all, clients will be saving a lot of more in their 401(k)s since the Pension Protection Act of 2006, among many other things, allows companies to automatically enroll employees into 401(k) plans. Given the likelihood of this larger flow of money, the NYSE’s informational memo wants management and reps to give themselves a formal checkup to ensure these assets are being properly cared for.
“Rollover IRAs offer benefits to investors, such as the ability to withdraw assets from one or more employer plans without tax penalties for consolidation in a single account. Rollover IRAs also may afford a greater array of investment options. However, the Division of Enforcement of NYSE Regulation, Inc. (‘NYSE Regulation’) has noted an increase in customer complaints concerning investments in rollover IRAs,” reads the memo.
Reps, do you understand the “know your customer” obligations under NYSE Rule 405? Management, are you aware of your supervisory obligations under NYSE Rule 342? Of course you do.