Consumer Protection: How U.K. Client Money Rules Differ From U.S. Customer Segregated Rules When a Custodian Firm Fails to Treat Customer Property Properly
Author: Ronald H. Filler.
Source: Volume 24, Number 05, May/June 2011 , pp.25-32(8)
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Abstract:
Following the collapse of Lehman Brothers in September 2008, there were major differences in the U.S. and the U.K. as to how customer assets were protected and returned. This article addresses the regulatory structures in place in each country regarding this essential customer protection feature, how those regulations vary, and what changes are still needed to ensure that customer assets held at a financial firm that collapses are timely returned. The article also analyzes how the current U.K. laws have proved to be ineffective in resolving this issue, the current status of U.K. judicial proceedings, and proposed new legislation pending in the U.K. that may resolve future financial insolvencies in that jurisdiction.Keywords: customer segregation, client money rules, FCM bankruptcy, customer protection, custodian banks, U.S. vs. U.K.regulations, financial services
Affiliations:
1: New York Law School.