Unit 28: Record Keeping Requirements under SEC 17a-3 & 4

Which of the following records must be kept for only three years? 1. Customer statements 2. Customer new account forms 3. Customer confirmations 4. Customer order tickets

3 and 4.

Stock certificate books

For closely held corporations, this is an actual book where the certificates are held until they are issued. A record of who the certificates are issued to is also found in the book.

6 year records are generally for

those having to do with the BD's holdings and assets it holds for customers. A BD's financial records are also 6 year retention records.

Organizational records

these are other records related to the foundations of the firm. An example would be Form BD, the registration application for a broker-dealer.

Which of the following items may be required to be kept more than three years? 1. U-4 forms 2. U-5 forms 3. Customer order tickets 4. Customer Confirmations

1 only. U-4 forms must be kept for three years after the rep terminates, so if the rep worked for the firm 30 years, the form would have to be kept for 33 years; all others are three-year records.

A partial list of those records that must be retained for 6 years from last use are listed:

1. Blotters 2. General ledger 3. stock record 4. customer ledgers 5. customer account records 6. designation of principals

Indefinite records are as follows:

1. Partnership agreement 2. Corporate charter or articles of incorporation 3. Stock certificate books 4. Minutes 5. Amendments 6. Organizational records

Almost everything else must be retained for 3 years after last use. Examples are:

1. advertising 2. trial balances (monthly financial report) 3. Form U-4, U-5, and fingerprint cards for terminated personnel 4. Customer confirmations 5. order tickets 6. other ledgers, such as securities borrowed and securities loaned, monies borrowed and monies loaned, and dividends and interest received. 7. A list of every office where each associated person regularly conducts business 8. Associated persons' compensation records 9. the firm's compliance and procedures manual

Records of original entry must be recorded no later than the next business day and must be kept readily available for

2 years. The records must be maintained for a period of six years but must be readily available for two years.

Which of the following are not three-year or six-year records? 1. Compliance and Procedures Manual 2. List of home, regional, and branch offices 3. Minutes of directors' meetings 4. Customer complaints

3 and 4 Minutes of directors' meetings (The Minute Book) is a lifetime record. Customer complaints must be kept on file for four years, not three or six. The Compliance and Procedures Manual, which must frequently be updated, and the list of all offices where business is done are both three-year records.

The following records must be kept for how many years? 1. A list of the offices where registered representatives conduct business 2. Compensation records for registered representatives 3. The firm's compliance manuals

3 years.

Minutes

A record of the meetings of the board of directors or the partners

Stock record

shows all securities held by the firm, the ownership of those securities, and where the securities are held. The stock record must be posted no later than the business day after the settlement date.

Partnership agreement

the foundational document of a partnership. If there is no written partnership agreement, there is no partnership.

Amendments

Any amendments to any of these records are kept with the og record

For 3 and 6 year records,

the most recent 2 years must be kept "readily accessible" meaning at the branch office, OSJ, or headquarters where the document would normally be stores. After 2 years, they may be stored at an offsite location so long as the records may be retrieved.

Corporate charter or articles of incorporation

the name varies depending on the laws of the state of incorporation. This is the foundational document of a corporation. If there is no charter, there is no corporation.

Written complaints must be retained

for four years after resolution. These records are normally maintained at the office of supervisory jurisdiction for the office where the compliant originated. If a complaint was delivered directly to the firm's headquarters, the record may be retained there.

Customer account records

might include the new account form and margin agreement, if appropriate.

Designation of principals

When an associate is appointed to a principal position and what areas the will oversee.

FINRA and SEC regulations apply to written complaints.

Written extends to: 1. paper 2. email 3. text 4. instant message 5. tweet 6. social media post etc

Blotter

a record of original entry. A member generally maintains blotters relating to the purchase and sale of securities, the receipt and delivery of securities, and the receipt and disbursement of cash. Must reflect transactions as of trade date/event date and must be prepared no later than the following business day.

General ledger

contains accounting records of the firm's assets, liabilities, and net worth accounts. From the general ledger, a firm prepares its financial statements. Must be prepared as frequently as necessary to determine compliance with the net capital rule, but in no event less frequently than monthly.

Customer ledgers

customer statements. Cash accounts and margin accounts are shown on separate ledgers. These ledgers must be posted no later than the settlement date.