Pending SEC Rule Forces Many To Move In-House
A pending rule by the Securities and Exchange Commission on broker-dealer subsidiaries has prompted the vast majority of credit union-owned investment CUSOs to abandon the CUSO model and bring their broker-dealer programs in-house.
"We moved them all in-house," Amy Beattie, executive at CUSO Financial Services, told The Credit Union Journal of her 100 credit union clients who had operated broker-dealer CUSOs. The combination of the impending SEC ruling, known as Reg B, which will no longer require credit unions to operate separate subsidiaries for their broker-dealers, and NCUA's three-year-old Incidental Powers Act rule allowing credit unions to profit from investment activities, has prompted the widespread move, according to Beatty and other CUSO executives at the annual NACUSO convention here.
Roy Crouse, manager of Allegacy Services, a CUSO owned by Allegacy FCU, said they moved their investment services in-house in order to better integrate it with their other operations. Beatty said most of CUSO Financial's credit union clients will continue to use her company to conduct broker-dealer transactions under the umbrella of the CU.