The Federal Reserve Board on Tuesday eased the disclosure requirements for brokers at section 20 units who are not located in a bank.
In a clarification effective Friday, the Fed said these brokers are no longer required to orally disclose every time they deal with a retail customer that securities offered by the section 20 are not federally insured.
The brokers, however, still must provide a written disclosure concerning deposit insurance whenever a customer opens an account with the section 20. Also, brokers located in a bank still must make the oral disclosure during every conversation with a customer.
"This is very positive," said Richard M. Whiting, general counsel at the Bankers Roundtable. "It is something our association has requested from the time the Fed started reviewing the firewalls. The restriction didn't make sense. Customers going to a securities firm don't expect their products to be insured."