Two brothers own a brokerage account together, and one of them dies. Does his share go to his brother or to his widow? The answer was settled the day the account opened, on one line of the new account form.
Without a basic record, a firm can't judge what fits a customer or show who approved the account. Financial Industry Regulatory Authority (FINRA) Rule 4512 sets the information needed to open an account:
- The customer's name and residence.
- Whether the customer is of legal age. This is a yes-or-no fact, not a date of birth.
- The responsible representative for the account.
- A principal's acceptance, meaning the signature of the partner, officer or manager who accepted the account.
- For an entity, the people authorized to act for it.
The firm must also ask for a trusted contact person, age 18 or older, whom it may call about the account. One common reason to call is suspected financial exploitation. If the customer names no one, the firm may still open the account, provided it made reasonable efforts.
Common mistakes
- Reaching for pattern day trader figures. Since June 4, 2026, the question is whether intraday margin deficits are cured as promptly as possible, not whether the customer has $25,000 of equity.
- Refusing to open an account without a trusted contact. The firm asks and makes reasonable efforts, then may open the account anyway.
- Holding up the opening for occupation or employer. The firm seeks those before the first trade settles. The tax ID is different: the CIP rule requires it before opening unless the customer has applied for one.
Bottom line
- Rule 4512: name, residence, legal age, the representative, a principal's acceptance and an entity's authorized people at opening, then tax ID, occupation, employer and other-member status before the first trade settles (CIP still needs a U.S.
- The firm must ask for a trusted contact age 18 or older, but the customer may decline.
- Reg T cash payment is due three business days after trade date (T+1 plus two).
- A margin account needs the credit and hypothecation agreements, the loan consent is optional, and Cboe Rule 9.1 approval comes before any options order.
Exam shortcut
Sort timing questions by their starting point. Some deadlines run from trade date: the DVP confirmation by end of T (with affirmation aimed at the same deadline), settlement on T+1 and Reg T payment by T+3. Others run from a different event: day-trading approval within 10 days of learning, and the options agreement within 15 days of approval. Eliminate any answer citing $25,000 or four trades in five days.
The full lesson (about 3,664 words, 24 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- B6
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