Chapter 10.7 Flashcards
ACATS
When a customer requests that his account be transferred to another member firm, the transfer must be made using the ACATS system in accordance with the following:
- The customer should submit an LOA instructing the receiving firm to initiate transfer instructions to the carrying firm. When the receiving firm obtains the LOA from the customer, they must immediately submit the instructions to the carrying firm.
- When the carrying firm receives a request from the receiving firm, the carrying firm must validate the request within 1 business day and the transfer must be completed within 3 business days.
- Upon validation, the carrying member must freeze the account to be transferred, cancel all open orders and no new orders may be taken.
Valid reasons for rejecting or “taking exception” to an ACAT request:
- Mismatched account titles
- Mismatched account types
- Mismatched tax ID #’s
- Missing or improper authorizations
**ACAT cannot be rejected due to money balance or securities positions disputes
The following assets are deemed to be subject to “delayed delivery” when a transfer is taking place:
- When-issued-when distributed securities
- Stripped coupons
- Insurance policies such as annuities
What type of securities won’t be transferred?
Options that will expire within 7 business days
Interfering with the transfer of a customer account
FINRA prohibits member personnel from interfering with a customer’s request to transfer the customer’s account in connection with the change in employment of the customer’s request to transfer the customer’s account in connection with the change in employment of the customer’s RR where the account is not subject to any lien for monies owed by the customer or other bona fide claim.
Protocol for Broker Recruiting
Permits departing representatives to take certain limited customer information with them to a new firm, and solicit those customers at the new firm, without the fear or legal action by their former employer. The protocol provides that representatives of firms that have signed the protocol can take:
- Client names
- Addresses
- Phone numbers
- Email addresses
- Account title information
Negative Response letter
Generally informs the recipient of the letter of an impending action, and requires the recipient to respond or act within a specified time frame if the recipient objects to the action. If the recipient does not respond, he or she is deemed to have consented to the action. A negative response letter can be used when transferring a customer’s account due to:
- The merger or acquisition of the B/D
- The B/D is changing it’s clearing firm
- There are changes in the networking arrangement of the B/D
**A negative response letter would not be used with normal routine changes in a customer’s B/D of record.
Updates/Changes to Customer Accounts
- Any change of address in a customer’s account must be reported in writing by the customer and notices that the account address has changed must be sent by the member firm to the customer within 30 days.
- Changes in the investment objectives of a customer must be updated on or before the 30th day after receipt of notification of the change
- If a client wants to transfer his account to another RR in the same firm, the new RR must review and update the customer account form
- Customer account information must be given to customers within 30 days of opening an account and then must be updated by the member firm every 36 months. If a customer refuses, neglects, or is unable to provide or update any account record information, the B/D is excused from obtaining the required information
- If there is a change in the name or address of a customer, the B/D must send the notification of the change to the customer’s old address within 30 days after receiving notice of the change
- If a customer’s stock or bond certificate become mutilated and the customer would like to get them replaced, the customer would either contact the transfer agent or the issuer directly, and request the replacement of the certificates.
