Two Brokerages to Grant Free Transfers of Fund Holdings

NEW YORK — Prudential Securities Inc. said Monday it has agreed with PaineWebber Group Inc. to allow their clients to freely transfer proprietary mutual fund holdings between accounts at the two Wall Street firms.

The arrangement is a departure from traditional practices at brokerages, which generally place restrictions on the ownership of proprietary funds by nonclients.

The agreement is the first of its kind, a PaineWebber spokeswoman said. Prudential, the fifth-largest U.S. brokerage firm, and PaineWebber, the fourth-largest, said the accord will offer their clients more flexibility and the potential to save on fees.

“We would hope that over the next several months that all of the big full-service firms will participate,” said Mark Sutton, the executive in charge of more than 6,000 brokers at PaineWebber.

Until now, clients moving accounts to a new firm usually had to sell shares of in-house funds. In most cases, investors have to be clients of a brokerage firm to own those funds. Exit fees typically are as much as $100, according to Michael Lipper, president of Lipper Analytical Services Inc.

Brokerage firms set up such barriers to investors who want to leave because they collect fees for managing other people’s money.

The new policy is scheduled to go into effect April 1.

“It is incumbent upon the securities industry to become more flexible,” said Prudential Securities Chief Executive Hardwick Simmons. Prudential has about 6,000 brokers.