The North American Securities Administrators Association is telling brokerage firms to stop stonewalling account transfers.

The NASAA says that that state securities regulators oppose any action by firms that interferes with customers’ requests to transfer their accounts to broker or firm of their choice. It says, “State securities regulators believe, as a matter of public policy, that customers should have both the freedom to choose their brokers and full and free access to their accounts.”

Although it believes that firms should be free to litigate their employment contracts with brokers who leave them, NASAA says that customer accounts should not be held hostage during the dispute. “Customers should not be exposed to the risk of losses or lost opportunities as a result of competition among firms. Customers are not parties to the litigation and have no opportunity to defend their interests.”

It says that state securities regulators will review complaints alleging delays of or restrictions placed upon account transfers and, if necessary, bring enforcement actions.

In one instance, regulators in Utah filed an action against a securities firm for refusing to transfer nearly 200 accounts after obtaining a temporary restraining order.

NASAA’s Broker-Dealer Section has discussed these issues with several larger firms. As a result of these discussions and heightened awareness of this issue, several firms have indicated they have voluntarily discontinued this practice.