In a notice clarifying the rules for account statements, the IDA says that its members can provide their clients with consolidated account statements, in addition to, but not in place of their standard statements.

“While consolidation of statements would be useful to customers in that it organizes a portfolio on a single document, there are regulatory concerns that prevent full consolidation in many cases,” says the IDA.

Customers may be confused about the investor protection applicable to the positions shown in a consolidated statement, says the IDA. Further, it might be unclear which investor protection agency covers the assets, and which regulatory agency oversees the activities of the company providing the information. The protection limits available to the investor might be difficult to interpret when the portfolios at affiliated entities are combined.

Confusion may also exist with respect to the legal entity with which they are dealing, says the IDA. Disclosure of segregated positions might also be limited on a consolidated statement, which may not be able to meet all of the requirements of the numerous regulatory agencies with jurisdiction over the
various entities reporting on the statement.

The IDA says that in order to balance these concerns with client needs for consolidated information, its members may provide consolidated statements to customers in addition to, but not in place of, the monthly statements required. Consolidated statements or portfolio reports must meet various standards.

“Members must have written policies, review procedures and internal controls in place to ensure that any statements or portfolio reports provided to clients – whether restating what is found only in the memberÕs legal entity statements or consolidating information from several sources – are accurate and complete. If such statements or reports include rates of return, such rates should be calculated on a fair and consistent basis following accepted methods such as those approved by the Association for Investment Management and Research.”