Books and Records of the BD Flashcards
What is the name for a firm that has been expelled from SRO membership or had their SEC registration revoked?
A Disciplined Firm
If a firm has 20 or more RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status?
> 20%
If a firm has 10 - 20 RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status?
4 or more RRs / 20 - 40%
If a firm has 5 - 9 RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status
> 40%
In determining whether a firm should be a taping firm, does it matter if RRs previously employed by a disciplined firm were individually disciplined?
No - does not matter; mere association with a disciplined firm is sufficient to be counted in the taping firm math
What is a firm designated if they exceed a threshold % of RRs associated with disciplined firms?
A taping firm
If a firm has been designated a taping firm FOR THE FIRST TIME, what can they address and in what time period?
They can do staff reductions of RRs that result in levels below the threshold levels WITHIN 30 days
If 30 days elapse after being notified of being a taping firm, how much time is remaining before taping compliance is mandatory?
30 additional days
60 days total from the time of first notice of designation as a taping firm
Once required to tape conversations, how long does this requirement last?
Taping is required for 3 years
If designated a taping firm, are firms allowed to tape only selected conversations of RRs?
No taping firms must record telephone conversations between ALL RRs and existing / potential customers
True / false: a firm is allowed to hire individuals to “dilute” the percentage of RRs associated with disciplined firms
False - only cure is staff reductions cannot hire “clean” RRs to dilute the calculation
If staff is reduced to avoid being deemed a taping firm, how long must firms wait before rehiring them
180 days
For the taping firm requirement, when a BD calculates the percentage of RRs formerly employed by disciplined firms, it does NOT include employees who have been employed for this time period (with no disciplinary history)
RRs who have been employed for 90 days or less are NOT counted in the calculation
How long must recordings produced at a taping firm be kept?
three years (two in an easily accessible location)
GENERAL BUSINESS records must be kept for how long from date of last use?
3 years (2 easily accessible)
Examples
- forms u4 / u5
- retail & inst advertisements
- customer trade confirmations
- finger print records
- reg D private placement records
- WSPs
CUSTOMER COMPLAINT records must be kept for how long?
4 years (6 years in the case of muni-related complaint) at the OSJ w 2 years easily accessible
AML records, including suspicious activity reports and currency transaction reports must be kept for how long?
5 years (2 easily accessible)
BUSINESS AND FINANCIAL / ACCOUNTING records (sales blotter, general ledger, list of
persons assigned to explain the records) of a BD must be kept for how long?
6 years (2 easily accessible)
NOTE - this is a default period if not already assigned a category
How long would fundamental records like articles of incorporation, partnership agreement, minute book, Form BD etc be required to be kept?
a firm’s lifetime
True / false: BDs are not allowed to keep electronic records, only paper ones
false - can keep electronic so long as it uses micrographic media (to preserve record w integrity - non-rewriteable and non-erasable)
These are records of original entry, containing daily account of all transaction of the firm and its customers (e.g., purchases, sales, receipts, deliveries)
Blotters
NOTE - blotters would NOT record commissions
Customer account records (such as new account form) must be kept for how long (post account closing)?
6 years post account closing
How long must a BD’s firm trial balances be prepared / retained?
trial balances are prepared monthly and must be retained for 3 YEARS
A BD must notify FINRA at least how many days prior to using electronic storage media for record keeping purposes?
at least 90 days
