Spring is approaching and you may feel it is time to clean out the office, including the filing cabinets. Before you start shredding documents you will want to check the FINRA Rule 4511 and SEC books and records rules 17a-3 and 17a-4. Also, be sure to reference your Written Supervisory Procedures as they may have more robust stated retention periods. The holding period for office, employee and compliance records varies. The following information will breakdown what needs to be retained and for how long.
Life of Firm
Formation documents are required to be retained for the life of the firm and the life of any succeeding broker dealers. These documents include but are not limited to:
- All Board of Directors meeting minutes
- FINRA Membership Agreement
- Corporate Stock Certificate Books
- Partnership Articles/ Articles of Incorporation
- All Forms BD and BDW, including all amendments (signed and notarized)
- Licenses or other documentation showing registrations with any securities regulatory authority.
6 years – first 2 years in readily accessible location
- General Ledger
- Security Position Records (each long and short position)
- Customer Ledgers
- Blotters – (requires principal review/approval)
- Customer Account Records – (requires principal review/approval
3 years – first 2 years in readily accessible location
- Confirmations
- Checkbooks, Bank Statements
- Monthly Trial Balances
- Subsidiary Records
- Long and Short Securities Differences
- Examination Reports
- Subsidiary Ledgers
- Correspondence (including email)
- Office location information
- Commission/Compensation
- Registered Representative documents
- FOCUS Reports – (requires principal review/approval)
- Order Tickets– (requires principal review/approval)
- Customer Complaints -including evidence of providing customer with the complaint disclosure notice – (requires principal review/approval)
- Option Records – (requires principal review/approval)
- Communication Records (must be retained for three years from the date of last use) – (requires principal review/approval):
- Advertising
- Sales Literature
Exceptions
While most records are required to be kept for a minimum of 3 or 6 years and within arm’s reach for the first 2 years, the following are a few nuances:
- An associated person’s employment applications and registered representative’s documentation (U4s, previous firm U5s, fingerprints, agreements, etc.) must be kept and easily accessible for 3 years after the person has terminated their employment.
- Firm’s compliance and supervisory procedure manuals must be kept and readily accessible for 3 years after last use. All versions must be signed.
- Customer Account Records are to be maintained and readily accessible for 6 years after the closing of the account or from the date information was last changed, whichever was earlier.
- Reports produced to review unusual activity in customer accounts, also known as exception reports, must be kept and accessible for a minimum of 18 months.
If you have questions regarding the books and records rules, please contact your NCS Regulatory Compliance Consultant or one of the compliance specialists at NCS Regulatory Compliance at 800-800-3204.
http://www.ncsregcomp.com/team/patrick-labbe/
%20(1).png)
2 minute read
