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. Professionals

    Record Keeping

    Record Keeping
  2. Professionals

    FINRA Rules

    FINRA Series 6: Section 12 FINRA Rules This section discusses Rule 2330, 2370, 2420, 3050, 3370, 8210 regarding actions, registered representatives, may or may not take on customer accounts.
  3. Professionals

    Compliance and Custody of Client Funds

    FINRA/NASAA Series 63: Section 4 Compliance and Custody of Client Funds. In this section margin account, customer complaints, custody of client funds and discretionary accounts.
  4. Professionals

    Opening a Brokerage Account

    Opening a Brokerage Account
  5. Professionals

    B. Types of Accounts

    Mailing Instructions All confirmations and statements will be sent to the customer’s address of record. Statements and confirmations may be sent to an individual with power of attorney ...
  6. Professionals

    Account Types

    NASAA Series 65: Section 17 Account Types. In this section types of brokerage accounts and commissions.
  7. Professionals

    Supervision

    FINRA Series 6 Exam Study Guide - Supervision. This section deals with NASD Rule 3010 which details Supervision requirements.
  8. Professionals

    Types of Brokerage Accounts

    Requirements for Opening Customer Accounts
  9. Professionals

    Self-Regulatory Organization (SROs)

    FINRA Series 7 Online Study Guide - Section 9 Self-regulatory organizations (SROs)
  10. Professionals

    Registration and Regulation of Brokers and Dealers

    Registration and Regulation of Brokers and Dealers. In this section minimum net capital Requirements, definitions, customer protection rule and privacy of consumer financial information.
RELATED TERMS
  1. Principal Orders

    A type of order carried out by a broker-dealer which involves ...
  2. Stuffing

    The act of selling undesirable securities from the broker-dealer's ...
  3. Firm Order

    1. A market order to buy or sell a security for a brokerage's ...
  4. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  5. Call Loan Rate

    The short term interest rate charged by banks on loans extended ...
  6. Account Manager

    An employee who is responsible for the day-to-day management ...
RELATED FAQS
  1. Do financial advisors need to be approved by FINRA?

    Learn about whether a financial advisor may be required to be approved by FINRA, and what exams a financial advisor needs ... Read Answer >>
  2. When an agent of a broker-dealer begins employment with another broker-dealer ... ...

    The correct answer is D). When an agent moves from one broker-dealer's employ to another, all parties are responsible for ... Read Answer >>
  3. ABC Broker-dealer has no office in state and transacts fewer than five trades during ...

    The correct answer is b. Under these circumstances, the broker-dealer is not required to register with the state and the ... Read Answer >>
  4. When a broker-dealer has decided to provide its registered representatives with ...

    The correct answer is A) All sales literature, specifically including reprints, must be approved by a principal of the firm ... Read Answer >>
  5. Under the Uniform Securities Act, which of the following actions is permitted for ...

    The correct answer is d). A sales representative may not make trades in a state unless both the sales representative and ... Read Answer >>
  6. When a corporation wishes to open a margin account with a broker-dealer ...

    The correct answer is b. Whenever a corporation opens an account with a broker-dealer, a resolution by the board of directors, ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center