1. (a) A broker-dealer registered or required to register under the act may not use funds arising out of a free credit balance carried for the account of a customer in connection with the operation of the business of the broker-dealer.

2. (b) The prohibition contained in subsection (a) does not apply if the broker-dealer has established adequate procedures under which each customer for whom a free credit balance is carried will be given or sent a written statement which:

   1. (1) Informs the customer of the amount due to the customer by the broker-dealer on the date of the statement.

   2. (2) Contains a written notice that:

      1. (i) Funds are not segregated and may be used in the business of the broker-dealer.
      2. (ii) Funds are payable on the demand of the customer.
      3. (iii) Is sent no less than once every 3 months together with or as a part of the customer’s statement of account.

Authority

The provisions of this § 304.061 amended under section 202.C of the Department of Banking and Securities Code (71 P.S. § 733-202.C); section 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. § 1-609(a)); and section 9(b) of the Takeover Disclosure Law (70 P.S. § 79(b)).

Source

The provisions of this § 304.061 adopted March 29, 1974, effective March 30, 1974, 4 Pa.B. 582; transferred and renumbered from 64 Pa. Code § 304.061, December 14, 2012, effective December 15, 2012, 42 Pa.B. 7533; amended January 12, 2018, effective January 13, 2018, 48 Pa.B. 389. Immediately preceding text appears at serial page (364767).

Cross References

This section cited in 10 Pa. Code § 102.021 (relating to definitions).