October 2, 2007
The comments provided herein are from the perspective of a broker dealer that deals primarily with retirement plan assets held by a third party custodian for which we act as administrative agent. Our firm is not a clearing firm and therefore does not utilize the ACATS system. Nonetheless, it is our firm's experience that the problem with transfers is not the initial turnaround time for validation of the transfer instructions, but rather what happens to transfers where our firm, when acting as the carrying member, has taken exception to the transfer-out request. For instance, our firm requires, for the investor's protection, that the investor's signature on the transfer instructions be Signature Guaranteed under the Medallion STAMP Program. When transfer paperwork is received without the investor's Signature Guaranteed, we take exception, by denying the transfer as incomplete, and we return the request to the receiving member. There appears to be no specific timeframe established for the receiving member to rectify or even notify the investor that an exception to the transfer has been made. Section (b)(2) of the rule states simply that the firms must "promptly" resolve any exceptions taken to the transfer instructions. The investor has no knowledge that an exception was made, and therefore, has an expectation that the transfer is in process. I contend that the proposed rule that reduces validation time from 3 business days to 1 business day will alone do nothing to resolve the delays in account transfers unless there is also established timeframes for concurrent and time specific communications with the investor as to the reasons for the exception.