Compliance and Regulatory Alerts - 04-11-19

FINRA Is Scrutinizing UTMA/UGMA Accounts

FINRA Is Scrutinizing UTMA/UGMA Accounts

In June 2018, Bates Group published an article reporting on deficiencies identified by FINRA in its exam findings which may trigger further scrutiny. In that article we noted FINRA’s focus on the Uniform Transfer to Minors Act (UTMA), among other exam topics. FINRA is looking at whether firms have adequate policies and procedures in place to comply with the UTMA and Uniform Gifts to Minors Act (UGMA), and how those policies and procedures are operationalized. Specifically, as we reported, it is seeking to ensure that control over accounts is passed to the beneficiaries once the minors reach the statutory age (18 or 21 in most states; an alternative age is permitted in a dozen or so other states).

How Bates Helps

Bates is working with clients to closely review their UTMA/UGMA client account records to identify the impacted populations, whether control over the accounts has transferred, and whether trading activity has occurred and commissions have been generated once beneficiaries have reached the statutory ages for control over the accounts. 

In particular, we are conducting large data analyses based on beneficiary (minor) dates of birth against the applicable ages for change of account control. We then help identify those accounts that should have been converted but have not, the trading done in those accounts, and the commissions earned. The resulting information is then used to respond to FINRA and discuss any remediation or other next steps.

For more information on how Bates Group can help your firm and counsel respond to UTMA/UGMA account inquiries, please contact us:
Scott Lucas  
Bates Group Managing Director, Regulatory & Internal Investigations
(971) 250-4344
Bates Group Managing Director
(917) 273-2682

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