ch 15 Flashcards
1
Q
trade confirmation
A
- document that confirms a trade of a security
- on the far is the amount of money due from or owed to the customer
- settlement date: includes the date money changed hands
- contains:
- whether member acted as agent or principal or dual agent (rep both sides of the trade
- source and amount of commission
- if there is a control relationship
- deferred sales load (if any)
- markup or markdown charged to retail customers when acting in a principal capacity
- identity of the share/units, price, # of shares
- total par value of the rate of debt securities
- accrued interest in a trade of debt securities- if the member is a market maker
- date and time of the transaction execution or state that it will be furnished upon request
- lower of yield to call or yield to maturity when a transaction in a debt security is done on a yield or dollar basis
- handling fees or mailing charges (if applicable)
- if the member is a market maker
2
Q
confirmation delivery
A
- customer must be sent or given a written confirmation of the trade at or before the completion of the transaction (settlement date)
- must be retained for 3 years
3
Q
when, as, and if issued contracts (when issued trades)
A
- new muni bonds issues are sold to investor before the bonds are issued and available for delivery.
- investor gets a when issued confirmation
- doesn’t include a total dollar amount or settlement date bc those are unknown
- doesn’t include accrued interested so total dollar amount is not shown
- once the bonds are issued, the customer gets a new confirmation with purchase price and settlement date
- must include: description of security, purchase price (dollar bond) or yield (serial bond), trade date
4
Q
electronic delivery
A
- can electronically send docs like confirmations
- must have procedures to that the info was delivered as intended and that the confidentiality and security of personal info are protected
- customer must provide written consent to get electronic delivery
- customers can be provided paper copies upon request
5
Q
customer account statements
A
- required to be sent at least quarterly
- penny stocks are sent monthly even when there is no activity
- positions shown are at current market value
- if illiquid instrument like a DPP and unlisted REIT, must provide a per share estimated value
6
Q
net investment
A
- based on the amount available for investment percentages in the estimated use of proceeds section of the offering prospectus
7
Q
appraised value
A
-per share estimated value reflecting an appraised valuation
- for DPP and unlisted REIT, performed at least annually by a third party
- derived from methodology that conforms to standard industry practice
8
Q
disclosures
A
- each January member must send statements to customers showing a summary of all interest and dividends credited to the account as well as the gross proceeds off all sales made the prior year
- Form 1099
- for joint accounts, the statement is sent to the person whose SS # is on the account
9
Q
updating customer account info
A
- retail customers who opens a new account must within 30 days of the opening the account get a copy of the account record
- ensure the info is correct
- member firm must send a copy of the account record every 36 months thereafter
- customer must notify firm of any changes (name, address, investment objectives), firm must send updated account record within 30 days
- BD’s must retain records of all the ID info for 5 yrs after the account is closed
- records made about CIP into verifying a customer’s identity must be rained for 5 yrs after the account is made
- accounts acquired through acquisition are not subject to customer ID procedures
10
Q
transferring customer accounts between member firms
A
- customer must sign a transfer form called the broker to broker transfer instruction form (TIF)
- automated customer account transfer service (ACATS) automates and standardizes raw procedure for a transfer
- once received by the carrying firm (the one losing the account) they have 1 business day to validate the securities listed on the TIF or take exception to the instructions
- if no exceptions, the carrying firm must complete the transfer of the account within 3 business days following validation
11
Q
following a reg rep from one member firm to another
A
- disclosures must be provided in edu material such as
- potential conflict of interest from financial incentives the rep gets
- some assets may not be directly transferable and may incur costs/fees
- potential costs related to different pricing structures and fees
- different products and services
- communication is required at the time of contact with the former customer by the reg rep or member firm
- can be written, electronic or oral (if oral, materials must be provided no later than 3 business days following contact)
- delivery of communication applies for 3 months following the date the reg rep begins employment
- this rule only applies to natural persons not institutional accounts
12
Q
SEC rule 17a-3 and SEC rule 17a-4
A
- SEC rule 17a-3: lists records that need to be kept
- address what records must be kept, when such records must be prepared and retained
- all records must be kept in a readily accessible place for 2 years
13
Q
written customer complaints
A
- must be kept for 4 years
14
Q
lifetime record
A
- stock cert book
- partnership agreement or articles or incorporation
- minutes of board or partnership meetings
15
Q
6 year records
A
- blotters
- general ledger
- stock ledger
- customer ledgers
- customer account records
- designated principals
