SIE28

Record Keeping

SEC rules mandate which records must be prepared by members, when those records must be prepared, and for how long the records must be retained. In lieu of maintaining paper records, firms may use digital storage media. Such storage media must have the capability to maintain records in nonrewritable and nonerasable format

Identify records maintained for 6 years

6 year records are generally those having to do with the BDs holdings and assets it holds for customers. A BDs financial records are also 6 year retention records. Partial list of those records that must be retained for 6 years from last use are: Blotters -- a blotter is 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. Blotters must reflect transactions as of trade date (or event date) and must be prepared no later than the following business day. General Ledger -- the 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. The general ledger must be prepared as frequently as necessary to determine compliance with the net capital rule, but in no event less frequently than monthly. Stock record -- the stock record will show 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. Customer ledgers -- customer ledgers are customer statements. Cash accounts and margin accounts are shown on separate ledgers. These ledgers must be posted no later than the settlement date. Customer account records -- 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 they will oversee.

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

A) Three years B) Six years C) For the life of the firm D) Four years Answer is A E: These are all three-year records.

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

A) two years. B) four years. C) three years. D) six years. Answer is A E: The records must be maintained for a period of six years, but must be readily available for two years.

Identify records maintained for 3 years.

Almost everything else must be retained for 3 years after last use. Some examples include: Advertising Trial Balances (monthly financial report) Form U-4, U-5, and fingerprint cards for terminated personnel Customer Confirmations Order tickets Other ledgers, such as securities borrowed and securities loaned, monies borrowed and monies loaned, and dividends and interest received A list of every office where each associated person regularly conducts business Associated persons' compensation records The firm's compliance and procedures manual **For 3 and 6 year records, the most recent 2 years must be kept "readily accessible", meaning the branch office, OSJ, or headquarters where the document would normally be stored. After 2 years, they may be stored at an offsite location so long as the records may be retrieved. ***

What records are kept for the life of the firm?

Records that are a part of the life of the firm are retained for as long as the firm exists. The term seen most often is "indefinitely" These records are the following: Partnership Agreement -- The foundational document of a partnership. If there is no written partnership agreement there is no partnership 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. 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. Minutes -- a record of the meetings of the board of directors (corporation) or the partners (partnership). Amendments -- any amendments to any of these records are kept with the original record Organizational records -- These are other records related to the foundations of the firm. An example would be Form BD, the registration application for a BD.

Identify records maintained for 4 years

Written Complaints must be retained for 4 years after resolution. These records are normally maintained at the office of supervisory jurisdiction for the office where the complaint originated. If a complaint was delivered directly to the firm's headquarters, the record ma be retained there. ***FINRA and SEC regulations apply to written complaints. Written extends to almost any communication that has letters organized into words: paper, email. text, IM, tweet, social media post, and the list goes on. Most firms have procedures for verbal complaints, but only written complaints have regulatory standing.***