July 30, 2012
Based on my personal experience (a single instance) the law (regulaton) is lacking in the area of:
1) Correctly crediting customers accounts when funds / shares are moved between entities.
For example, if a customer moves his account from one entity to another, the losing entity should have an accural on their books for the number of shares due the customer. It appears that the receiving entity is Not receiving this accurred amount of shares from the losing entity. Consequently, the customers account is never credited by the receiving entity for the accured shares. Hence, the customers account is short (missing), the number of accured shares when their account is moved from one entity to another.
2) Customer accounts may not be receiving share reinvestment under a closed-end fund if an accounting problem occured at the time reinvested shares were declared.
Closed end mutual funds appear to prefer to pay the shareholder cash rather than credit the customer account with additional closed-end shares.
3) Broker Dealers are changing customer account elections without obtaining authorization (approval) from the customer.
For example: In order to collect fees, broker dealers are changing accounts from dividend reinvestment to cash payout in order to collect fees. If the customer was never notified of such fees due, the unauthorized change of the account enable fee collection, may impact the customer adversely.