Nov. 15 is deadline to be Y2K-compliant

Brokerages risk going out of business

Securities industry

July 28, 1999|By BLOOMBERG NEWS

WASHINGTON -- The Securities and Exchange Commission approved a rule yesterday requiring brokerages to cease business and transfer customer accounts to other securities firms if they haven't adequately addressed Year 2000 computer problems by Nov. 15.

The rule isn't expected to put many firms at risk of being closed, since most passed readiness tests conducted by the Securities Industry Association in March and April.

"We hope there will be nobody" ordered closed, said Robert Colby, the SEC's deputy market-regulation director.

Nevertheless, brokerages are required to notify the SEC by Aug. 31 if they flunked the SIA testing or don't meet other criteria. They will be permitted to stay open after Aug. 31 if their chief executives certify that the firms are addressing shortcomings, have scheduled tests of computer systems and will be ready for the change of the millennium by Nov. 15.

The SEC will seek court injunctions starting Dec. 1 to shut down any firms that made such promises and still are not ready by mid-November.

At most, 50 firms will not be ready by Aug. 31, Colby said. Of those, many are expected to have only minor problems that can easily be fixed.

Pub Date: 7/28/99

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