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News June 28, 2004 Issue

Brokers Need to Transfer Customers’ Cost Basis Information, Says NASD

If a client is changing brokerage firms and the old broker can transfer the client’s cost basis information electronically, it must do so if asked.

“The transfer of cost basis information to the receiving firm should occur as a matter of course as part of the account transfer process,” said the NASD in Notice to Members 04-07. “Refusing to deliver or impeding the delivery of cost basis information harms the customer and constitutes conduct inconsistent with just and equitable principles of trade.”

The NASD emphasized that there is no requirement for brokers to create cost basis information if the firm does not already maintain it in an electronically transferable form.