B-Ds suffer SIPC 'sticker shock' as fees come due

Higher assessments by the Securities Investor Protection Corp. are shocking some brokerage firms.
JUL 31, 2009
Higher assessments by the Securities Investor Protection Corp. are shocking some brokerage firms. The new SIPC fees covering the second quarter were due on Friday, but firms have a 15-day grace period, SIPC spokesman Scott Stapf said in a statement. For the last 14 years, firms have been paying a flat $150 per year, but the new annual assessments are running into the thousands of dollars for small firms. “A lot smaller firms are really resentful,” said Howard Spindel, founder of Integrated Management Solutions in New York, a consultant to broker-dealer firms. “They're paying for Bernie Madoff,” he said. “It's sticker shock for some of them.” Early this month, the SIPC said it had committed $231 million to pay off 543 approved claims from Madoff clients. The SIPC pays up to $500,000 per customer in cases of fraud. The Washington-based SIPC is charged with keeping at least $1 billion in reserves to pay off customers of failed broker-dealers. [More: SIPC raises assessment fees on brokerage firms] Don Bizub, chief executive officer at Western International Securities Inc., a Pasadena, Calif., firm with about 300 independent-contractor reps and $25 million in revenue, said his assessment will go to about $44,000 a year. “I was pretty amazed,” he said. “We hadn't budgeted for that.” Jed Bandes, president of Mutual Trust Company of America Securities Inc. in Clearwater, Fla., which has about 30 brokers bringing in $2 million to $3 million in revenue, estimated his fee will come out to about $4,500 a year. “I'm totally appalled,” he said. The increase in assessments is necessary to ensure that the reserve fund “is sufficient … thereby increasing public confidence in the securities markets,” Mr. Stapf said in the statement.

Latest News

RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence
RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence

Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.

Top Commonwealth advisor to recruiters: Stop with the cold calls already!
Top Commonwealth advisor to recruiters: Stop with the cold calls already!

“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.

Blue Owl Capital, Voya strike private market partnership for retirement plans
Blue Owl Capital, Voya strike private market partnership for retirement plans

The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.

Why AI notetakers alone can't fix 'broken' advisor meetings
Why AI notetakers alone can't fix 'broken' advisor meetings

Wealth tech veteran Aaron Klein speaks out against the "misery" of client meetings, why advisors' communication skills don't always help, and AI's potential to make bad meetings "100 times better."

Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit
Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit

The proposed $120 million settlement would close the book on a legal challenge alleging the Wall Street banks failed to disclose crucial conflicts of interest to investors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.