Series 6

AAA

Customer Accounts - Opening a New Account

Every new account requires a new account form. This is one of the most important documents you will encounter as a registered representative. The function of the new account form is two-fold: it helps the registered representative establish a trusting relationship with the client, plus it fulfills a number of regulatory requirements.

Despite differences from firm to firm in the content or format of the new account form, the basic customer information that must be collected before an order is placed remains the same. Lack of proper documentation may result in disciplinary action, including fines, dismissal and injunctions against performing securities transactions.

Information Required
The FINRA requires the registered representative to provide the following information when opening a new account for a customer:

  • Customer's name and residence
  • if Customer' is of legal age
  • The signature of the registered representative opening the account
  • The signature of the principal approving the account
  • Whether distributions should be reinvested or paid out as cash
  • Customer's occupation, and name and address of the employer
  • Whether or not the customer is affiliated with another FINRA member
  • Citizenship
  • Name of any person with authority to make transactions in the account

Furthermore, according to NYSE Rule 405, the registered rep should have a basic understanding of the customer's present financial situation, risk tolerance, investment objectives, current income, investment holdings and net worth, tax status and financial needs.

Classification of Accounts
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