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Unit 5 Customer Accounts

Terms in this set (66)

FINRA rules regarding signatures on new accounts
FINA rules do NOT require the signatures of the registered representative or the customer on the new account form. Rules also require the new account form to identify whether the customer is a director, officer, or shareholder of 10% or more of a publicly traded company.
If a customer refuses to provide all information requested
The account may still be opened if the firm believes the customer has the financial resources necessary to support the account.
The registered representative can make recommendations only if sufficient information has been given to determine
Suitability.
What happens when customers place transactions that the registered representative considers unsuitable or has not recommended?
The RR should mark the order ticket, Unsolicited.
The USA PATRIOT Act requires financial institutions to maintain
Customer Identification Programs (CIPs) to prevent financing of terrorist operations and money laundering
The Office of Foreign Assets Control (OFAC)
Publishes and maintains a list of individuals and companies owned or controlled by, or who are acting for, or on behalf of, targeted countries and individuals. When identified, their assets are blocked and RR's are prohibited from doing business.
To ensure that the information obtained from each new customer is accurate, firms must furnish to each customer within
30 days of opening the account, a copy of the account record.
Two examples, for instance, of changes that one would expect to be noted are
Changes in employment and financial status. If the customer indicates any changes, the firm must furnish the customer with an updated account within 30 days. This account updating must occur at least 36 months thereafter.
Principal types of ownership are
Individual, joint, corporate, and partnership
Trading Authorization or Power of Attorney
Accounts may be opened with someone other than the owner having the authority to buy and sell securities on behalf of the owner
Discretionary
A registered representative or other person who has been given written authorization from a customer to make trading decisions for the customer
Custodial
An adult who has been designated to act on behalf of a child who is the beneficial owner of the account
Fiduciary
A third party who has been legally appointed to prudently manage the account on behalf of another person or entity
Transfer and Ship
Securities are registered in the customer's name and shipped to them
Transfer and hold in safekeeping
Securities are registered in the customer's name, and the broker/dealer holds them in safekeeping
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