Failure to Make Y2K Fixes Could Cost Brokerages

The U.S. Securities and Exchange Commission may require brokerages that have inadequately addressed year 2000 computer problems to transfer their customer accounts to other firms, SEC officials said Monday.

The commission will consider today whether to issue the proposal for 30 days of public comment, as a prelude to deciding whether to adopt the plan as a rule.

If adopted, the proposal is expected to target a relatively small number of brokerages, clearing firms and transfer agents that haven’t moved swiftly enough to upgrade their computers, SEC officials said.

The proposal would apply to firms that fail systems testing conducted by the Securities Industry Assn., the brokerage industry trade group, and inspections by the SEC staff, the officials said. The vast majority of firms are expected to pass the tests and inspections. If the proposal is ultimately adopted by the commission, it would go into effect several months before the end of the year, officials said.