Customer Accounts - Important Account Rules

Opening the brokerage account is just the first step. A registered representative and the firm for which he or she works have ongoing responsibilities to their clients and to their regulators.

Account Rules
Broker-dealers must send confirmation of each transaction to the account owner at or prior to settlement.

  • These are supplemented by monthly (or, in a thinly trading account, quarterly) statements. These and all other substantive notes to the investor must be reviewed and approved by a manager.

  • Broker-dealers must also retain any correspondence received from each client.

  • The accounts of employees of SROs or other broker-dealers require additional scrutiny at the supervisory level for as long as they are open in order to ensure that there are no conflicts of interest. Duplicate confirmations and account statements must be sent to the investor's employer.

  • For those accounts over which the registered representative has discretionary authority, each order needs to be marked "discretion" and approved by a manager.

  • The broker-dealer also needs to keep this correspondence on file:
    • Changes in designation on orders
    • Erroneous reports to customers regarding order executions
    • Customer complaints
    • Acceptance of COD purchase orders
Closing Accounts
Related Articles
  1. Brokers

    Broker-Dealer Industry 101: The Landscape

    Independent broker-dealers are a great choice for experienced, self-starter planners who have established practices.
  2. Personal Finance

    RIAs and Brokers: What's the Difference?

    RIAs and brokers are held to different standards when providing investment advice. Here's how they differ.
  3. Trading Systems & Software

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
  4. Professionals

    How To Answer Option Questions On The Series 7 Exam

    Learn how to answer option questions on the Series 7 exam. Pass your Series 7 exam with the help of these tips.
  5. Professionals

    Series 55

    FINRA Series 55 Exam Guide
  6. Professionals

    Series 62

    FINRA Series 62 Exam Guide
  7. Professionals

    Series 99

    FINRA/NASAA Series 99 Exam Guide
  8. Professionals

    Series 65

    FINRA/NASAA Series 65 Exam Guide
  9. Professionals

    Series 6

    FINRA Series 6 Exam Guide
  10. Professionals

    Series 66

    FINRA/NASAA Series 66 Exam Guide
RELATED TERMS
  1. No results found.
RELATED FAQS
  1. What are the differences between the Series 6 exam and the Series 7 exam?

    The Financial Industry Regulatory Authority (FINRA) offers a variety of licenses that must be obtained before conducting ... Read Full Answer >>
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!