SEC Seeks Data on Health Of Stock Firms' Parents
WASHINGTON -- The Securities and Exchange Commission has proposed rules that would allow the agency to keep closer tabs on the financial health of brokerage firms' parent companies.
Under the proposal, brokerage houses would have to keep detailed records and file quarterly reports on the finances of their affiliates and parents. The rulemaking was mandated by legislation last year, which was prompted by concerns that risky activities of companies could endanger brokerage customers' holdings.
SEC officials said the recordkeeping requirements would focus on holding company activities with a high potential for risk, such as securities and commodities trades, real estate investments, and interest rate swaps.
SEC Chairman Richard Breeden called the proposal the most important of the legislated market reforms.
|A True Picture'
Citing the scandal at Bank of Credit and Commerce International and failures of Drexel Burnham Lambert and Bank of New England, Mr. Breeden said regulators frequently "do not have a true picture of what actually exists" inside complex corporate empires. "That era has come to an end."
Responding to criticism that complying with the proposal would be difficult for holding companies, Mr. Breeden said: "If it is an excess burden to disclose the swap portfolios or options and futures portfolios of Sears or General Electric, then they are not required to own a broker-dealer."