SEI Private Trust “Waiver of Lien” Communication

A number of you have been calling regarding the letter from Martin Whalen of SEI Private Trust.  Knowing if ten clients call, 100 clients have the same question… we hope to clarify Mr. Whalen’s poorly written missive…

The issue revolves around SEI Private Trust Company (SPTC) removing its right to apply a lien to IRA accounts in certain situations.

To simplify the meaning in the communications:

1.       The change in language is intended to protect clients.  It is not for SEI’s protection and does not benefit SEI.


2.       The reason for the change is that some courts are invalidating IRAs and subjecting them to bankruptcy claims (IRAs are normally exempt from bankruptcy).  Standard industry language in most custody agreements (including SPTC) allow custodians to impose a lien on the account for unpaid amounts owed only to the custodian.  Some attorneys have taken that standard language and rationalized it to include other bankruptcy liens and claims, some courts have allowed the loophole.


3.       SEI revised its language to avoid this issue (they revised the language to limit their ability to impose a lien other than for indebtedness specifically related to the IRA account itself) in order to ensure this does not become an issue for our clients.


4.       This only applies to IRA accounts.


SPTC is being proactive and keeping up with ongoing regulatory changes that may affect you our clients and to ensure that you are not negatively impacted.

We applaud their efforts!  (Now if they would just write a little clearer…)  As always drop us a note or call with questions.