A signed application and a customer's check do not complete account opening. Required supervisory approvals, documented acceptance, and permission for any special activity still need to be in place.
You gather customer information; the firm decides whether to accept the relationship. A principal is a securities professional registered and qualified for assigned management or supervisory responsibilities. Obtaining supervisory approvals means routing the account to the designated reviewer and resolving missing information before allowing activity that requires approval.
The Financial Industry Regulatory Authority (FINRA), the securities industry's self-regulatory organization, requires firms to establish supervision under Rule 3110. Written procedures assign qualified supervisors and explain required reviews. The firm retains ultimate responsibility even when it delegates work.
Under FINRA Rule 4512, the account record must document acceptance through the signature of the designated officer or manager. Retain the customer's name, residence, legal-age status, responsible representatives, and their responsibilities where applicable. For an entity, identify people empowered to transact for it.
An account registration identifies the legal owner and ownership form. Match it to supporting documents during required review. For a trust, verify the trustee's powers from trust documentation.
Common mistakes
- Applying seven business days to every new account. FINRA Rule 2330 ties that deadline to a complete, correct annuity package.
- Treating 30-day account-record delivery as permission to postpone required approvals.
- Treating an employee's mutual-fund-only account like an unrestricted brokerage account under FINRA Rule 3210.
Bottom line
- Account acceptance must be documented under FINRA Rule 4512 and firm procedures.
- Discretion beyond time and price requires prior written customer authorization and written firm acceptance.
- Deferred variable annuity review precedes application transmission and has a seven-business-day outside deadline after complete OSJ receipt.
- Customer funds and securities require secure handling and documented delivery.
Exam shortcut
Identify the pending action first: opening, discretionary trading, annuity processing, changing an order's account, or moving customer property. Match the missing permission to that action. A signed application, customer consent, employer consent, and principal review solve different problems. Circle the clock's trigger: complete OSJ receipt, account opening, information update, account closure, or hold placement. For restriction questions, identify the reason before selecting refusal, limited activity, closure, or a temporary hold.
The full lesson (about 3,026 words, 22 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- B6
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