3.j Flashcards
(7 cards)
What is the main factor that determines if an account registration change requires a new account to be opened?
If the ownership of the account changes, which is usually indicated by a change in the Tax ID Number (like a Social Security Number). If the Tax ID number changes, a new account must be opened. If the owner stays the same, the existing account can usually just be updated.
How would you add a new owner to an individual or joint account? How would you remove an owner from a joint account?
- Adding an Owner: This is usually allowed. All existing owners must authorize it, and the new owner must sign a new account form.
- Removing an Owner: This is generally not allowed. It typically requires closing the old account and opening a new one with the desired registration, then journaling the assets over.
If a corporation changes its authorized trader, or a trust gets a new trustee, is a new account required?
No. Because the owner of the account (the business entity or the trust itself) is not changing, a new account is not needed. The firm just needs proper documentation (like a new corporate resolution) to update the authorized persons.
What is the Automated Customer Account Transfer Service (ACATS)?
ACATS is the system that automates and standardizes the procedure for transferring an account from one brokerage firm to another.
What form begins the account transfer process, and which firm sends it to ACATS?
The Transfer Initiation Form (TIF) starts the process.
The receiving firm (the new firm) has the customer sign the TIF and submits it to ACATS.
Once the old firm (the ‘carrying firm’) receives the TIF, what is the transfer timeline?
The carrying (old) firm has:
* One business day to validate the transfer instructions.
* Three business days after validation to complete the transfer of the account assets.
Can a brokerage firm interfere with or refuse to transfer a customer’s account?
No, not without a valid reason.
A firm cannot obstruct a transfer unless there is a legitimate claim or lien against the assets in the account (for example, if the customer owes the firm money in a margin account).
