FINRA Issues Guidance On Handling UTMA/UGMA Accounts

FINRA reminded member firms about supervisory requirements concerning Uniform Transfers to Minors Act ("UTMA") and Uniform Gifts to Minors Act ("UGMA") accounts.

In a regulatory notice, FINRA described UTMA/UGMA accounts as custodial accounts that facilitate the transfer of various forms of assets to minors without the need for formal trusts. FINRA clarified that firms managing UTMA/UGMA accounts must obtain "essential facts" about their customers - as required under FINRA Rule 2090 ("Know Yorulesur Customer") - which are defined as facts that help to facilitate (i) the effective service of a customer's account, (ii) special handling based on the needs of each account, (iii) understanding of the scope of an individual's authority acting on behalf of a customer and (iv) compliance with all relevant securities laws. FINRA stated that firms must implement supervisory systems designed to ensure that firms gather information on, and stay up to date with,