Series 7

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



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