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SEC Cracks Down On Hybrid RIAs' Sweep Money Market Accounts

FYI: The Securities and Exchange Commission is cracking down on dually registered advisors’ use of more costly money markets and cash sweep arrangements when less expensive products are available, a top SEC enforcement official said yesterday.

“The more we look, the more undisclosed or inadequately disclosed financial conflicts we find,” said Stephanie Avakian, co-director of the SEC’s Division of Enforcement, speaking to advisory firm executives at a London conference.

Since interest started to rise in 2016, sweep money market accounts that pay far less than other money market funds have been a huge source of profits for broker-dealers, banks and custodians. At some BD's, sweep accounts could be generating more than 25 percent of profits. Many fiduciary advisors view them as suitable only as a place to park very short-term cash.
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