SEC Gets Tough on Y2K Compliance

The Securities and Exchange Commission approved a rule requiring brokerages to cease business and transfer customer accounts to other firms if they haven’t adequately addressed year 2000 computer problems by Nov. 15.

The rule approved Tuesday isn’t expected to put many firms at risk of being shut down, because most passed readiness tests conducted by the Securities Industry Assn. in March and April. “We hope there will be nobody” deemed non-compliant, said Robert Colby, the SEC’s deputy director of market regulation.

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

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.