The net capital in the form of liquid assets of the broker-dealer, however, was not required to be separately escrowed for the exclusive benefit of customers.
The broker-dealer community quickly institutionalized, as a standard practice, the conducting of due diligence investigations of any stock offerings in which they involved themselves.
The report found closed-end funds and interval funds were not as susceptible because investors must go through broker-dealer or banks, which are subject to anti-money laundering regulations already.
Although many broker-dealers are independent firms solely involved in broker-dealer services, many others are business units or subsidiaries of commercial banks, investment banks or investment companies.
Each broker-dealer was required to issue an early warning if its net capital dropped to less than 120% of the broker-dealer's absolute dollar minimum requirement.
In a soft dollar arrangement, the investment manager directs commissions generated by a client's or fund's transactions to a broker-dealer or other trading venue.