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1. Common stock
2. Preferred stock
3. Debt securities
4. Corporate debt
5. Municipal debt
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8. Alternative pooled investments
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10. Taxes
11. The primary market
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15.4.1 Regulation S-P
15.4.2 Telephone Consumer Protection Act
15.4.3 Public communications
15.4.4 Proxy rules
15.4.5 Licenses & CE
15.4.6 Registered representative rules
15.4.7 Record retention requirements
16. Wrapping up
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15.4.7 Record retention requirements
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15. Rules & ethics
15.4. Other laws & regulations

Record retention requirements

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Broker-dealers are required to keep certain books and records on file. In the event of a mishap during a customer interaction or a general business problem, it’s important to have documentation showing what occurred. Record retention time frames range from 3 years all the way to the lifetime of the firm, depending on the type of record. These are the requirements to be aware of for the exam:

3 years

These records typically relate to customer communications and employee records. The documents that must be kept on file for at least 3 years include:

  • Employee records
    • Form U-4
    • Form U-5
    • Fingerprint records
  • Trade confirmations
  • Statements
  • Public communications
    • Correspondence
    • Retail communications
    • Institutional communications
  • Trial balances*

*Trial balances show all of the credits and debits (money in and money out) related to the broker-dealer’s business. Here’s an example of one. You don’t need to know much about them except they require a 3-year retention requirement.

4 years

There’s only one thing with a 4 year retention requirement - customer complaints. Complaints unfortunately have two retention requirement time frames depending on how the question is asked. If it’s a FINRA-based or general question, complaints require a 4 year retention period. However, if it’s an MSRB-related question, complaints require a 6 year retention period. If this sounds confusing, here are some examples of questions you’ll see on this topic:

According to FINRA rules, how long must broker-dealers maintain complaints on file?

Answer: 4 years

You could also see this:

According to MSRB rules, how long must broker-dealers maintain complaints on file?

Answer: 6 years

For whatever reason, the two regulators decided on different time frames, and unfortunately, it’s a testable topic.

5 years

A few documents require a 5 year retention period, and they all relate in some way to anti-money laundering (AML):

  • Currency transaction reports (CTRs)
  • Suspicious activity reports (SARs)
  • Customer identification program (CIP) information

6 years

Most of the documents require a 6-year retention period are related to customer or trade records:

  • Customer account records
    • New account forms
    • Customer agreements, (like the margin agreement)
    • Trading authorization forms
  • Customer complaints (MSRB)
  • Blotters*

*Blotters are internal trading records that keep track of the securities the broker-dealer bought and sold on any given day. You don’t need to know much about them except they require a 6-year retention requirement.

Lifetime

There are some documents broker-dealers must keep on file for the lifetime of the firm. All of these documents relate to the structure of the firm or its operations.

  • Stock certificates
  • Partnership agreements
  • Articles of incorporation
  • Meeting minutes

Many people remember the acronym ‘SPAM’ to remember these. Remember Spam, the meat? Many people say Spam lasts forever.

Summary

Here’s a chart summarizing the information above:

Timeframe Documents
3 years Employee records
Trade confirmations
Customer statements
Public communications
4 years Complaints (FINRA)
5 years CTRs
SARs
CIP information
6 years Blotters
Customer account records
Complaints (MSRB)
Lifetime Stock certificates
Partnership agreements
Articles of incorporation
Meeting minutes

Regardless of any of the record retention requirements listed above, each record must be readily available if the document was created within the previous 2 years. If FINRA requests for documents that were recently created, they want broker-dealers to offer these records quickly.

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