Bank scanning accounts have been associated with consulting programs for many years. In this context, where advisory disputes are subject to extensive regulatory review, the SEC is now responding to the potential for unre revealing disputes related to the compensation of the consultant or its affiliates in connection with bank sweep accounts. The U.S. Securities and Exchange Commission (SEC) is behind another initiative that raises concerns about the disclosure of consultants and disputes related to bank deposit sweeping programs (BDSPs). A recent speech by Stephanie Avakian, co-director of the Enforcement Division, shows where the SEC is headed. Steps to take now. In anticipation of regulatory review, companies can assess any potential conflicts related to their broom account options that they recommend or select. Disclosures should be reviewed to ensure that key conflicts are fully and fairly disclosed, including a debate about the nature and extent of conflicts, their impact on customers and how the company can manage conflicts. In addition, companies will want to evaluate their processes to ensure that recommendations and selections for scanning account options meet the dusty assistance of their advisors to cover the client. Companies can also evaluate their books and records to see how well they document the basis of investment advice regarding scanning account options. Consultants may also review their policies and statements regarding the collection of cash holding advisory fees and their cash account review processes. Eurodollar sweeps are transfers of legal funds to the bank`s offshore units, whereas they are essentially an accounting technique that allows banks to lend the funds in full without having to pay the required reserves normally required and without having to pay FDIC insurance (since the sweep is not insured).
Essentially, the funds are only unsecured liabilities of the bank and, therefore, the highest interest rates are offered by the bank on day-to-day loans. We are also looking at cash sweeping agreements. Cash in advisory accounts is often automatically injected into a money market investment fund or bank deposit sweeping program. A dual-registered advisor or an advisor to an associate broker-dealer may have a financial interest, a conflict, if he recommends a cash investment over another. For example, some money funds pay a 12b-1 fee or make income distribution payments that can be shared with a dual-name registered consultant or a consultant`s related broker, while other money funds do not bear these fees. Consultants who recommend or select different money funds must disclose their clients in a comprehensive and fair manner. In the past, the Commission has undertaken law enforcement actions in which consultants have not been able to provide adequate information. “repo sweeps” are for companies that are concerned about the security of the bank.
In this contract, funds deposited with the Bank are secured by a portion of the Bank`s outstanding loans. If the bank were to fail, the depositor would receive only the bond holdings and then sell the bonds to get their money back (unless something happens in the interim with bond prices). Businesses and individuals should keep in mind the cost of scanning accounts, as the benefits from increased returns from non-current account investment vehicles can be offset by the fees charged for the account. Many brokers or banks charge a flat fee, while others charge a percentage of the return. CCO staff indicated that bank trustees should seek the advice of an advisor before entering into sweeping agreements or other sweeping agreements for which the bank could be compensated, and that legal counsel dev