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FINRA Reminds Member Firms of Their Supervision Responsibilities of UTMA and UGMA Accounts

On February 27, the Financial Industry Regulatory Authority (FINRA) released Regulatory Notice 20-07, reminding member firms of their supervisory responsibilities with respect to supervise Uniform Transfers to Minors Act and Uniform Gifts to Minors Act accounts (collectively, UTMA/UGMA Accounts). UTMA/UGMA Accounts are custodial accounts that allow a donor to transfer funds, securities and other assets to minors without the need for a trust. FINRA advised member firms to implement procedures to address termination of the custodianship upon the minor reaching the age of majority and to verify whether the custodian has authority thereafter (typically, the custodian’s authority ends upon the minor reaching majority). Failure to have reasonably designed procedures in place that take into account the termination of custodianship and resulting change in authority may result in a mishandling of the UTMA/UGMA Account.

Regulatory Notice 20-07 is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 59


About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange Commission, the US Commodity Futures Trading Commission and financial industry self-regulatory organizations. 

Jack West Financial Attorney Katten

Jack West is an associate in the Financial Markets and Funds practice.