Regulators Scrutinize Fee Accounts

On Wall Street, November, 2004 by Rosalyn Retkwa

The self-regulatory organizations are taking a closer look at fee-based accounts - and brokers might not like what they find.

In a seeming reversal of the thrust of the 1995 Tully Report - which called fee-based accounts a "best practice" and urged the conversion of commission-based accounts - both the NASD and the New York Stock Exchange now have decided that fee-based accounts might not be right for everyone, particularly for clients who don't trade very much.

Under a new regulatory game plan, firms will be expected to audit and review all fee-based accounts at least once a year to determine whether clients would have been charged less had they paid commissions.

"A lot of folks are feeling whipsawed," said Dennis Zank, president of Raymond James &...