Introduction

Welcome to Books and Records: the requirements that tell a member firm what records to make, what records to preserve, how long to keep them, where they may live, and who holds them after the firm is gone.

The unit walks through:

• The umbrella FINRA recordkeeping framework
• The SEC's recordmaking list and the records-retention list
• The U.S.-based-copy mandate for nonresident broker-dealers
• The post-withdrawal custodian regime that survives a firm withdrawal
• The Taping Rule that targets firms with high concentrations of registered persons formerly with disciplined firms
• The dedicated FINRA records series (customer account information, written complaints, negotiable-instrument authorizations, account-name changes)

Exam Weight: Part of 30% (~45 questions across Function 2)

What You'll Learn

In this unit, you'll cover:

• General Recordkeeping (FINRA-SEC Bridge): The umbrella rule that pulls SEC recordkeeping mechanics into the FINRA rulebook, the 6-year default retention floor for FINRA records with no specific period stated, and the requirement that all preservation comply with the SEC's records-retention rule format and accessibility standards
• Records to Be Made: Per-office designated-recordkeeping-personnel records, account-approval records, and records identifying the principal responsible for compliance policies and procedures
• Records to Be Preserved: 3-year-after-superseded retention for compliance and supervisory manuals, electronic-storage standards (the 2022 WORM-or-audit-trail election and the executive-officer-versus-third-party access undertaking), survival of retention obligations after the firm ceases business, independent-access requirement for outsourced cloud storage, and prompt furnishing to the SEC
• Nonresident Broker-Dealers: The U.S.-based-copy mandate, the written notice to the SEC of the U.S. address, and the 14-day SEC production window after written demand
• Custodian of Books and Records (Post-Withdrawal): The Form BDW custodian-designation trigger, the eligible-custodian universe (an associated person of the member or another FINRA member), the consent-before-filing requirement, and the conversion-without-alteration standard for format changes
• The Taping Rule: The 5/40%, 10-19/4-person, 20+/20% disciplined-firm-concentration thresholds, the requirement to tape all registered-person customer telephone calls, the 3-year retention floor (first 2 years easily accessible), and the one-time 60-day reduction option to drop below the threshold and avoid the requirement
• Other Recordkeeping Records: The 6-4-3 retention pattern across customer account information (6 years after update / 6 years after closure), written complaints (4 years), and negotiable-instrument authorizations (3 years after expiration), plus the principal-approval requirement for changes in account name or designation

Why This Matters

The Series 24 exam tests three principal-level themes from this material:

• Whether the firm understands that books-and-records compliance is a format and accessibility discipline, not just a content discipline. A firm can capture the right records and still violate the FINRA umbrella by storing them in a format that does not meet the SEC's electronic-storage standards, or by relying on a vendor portal that the cloud provider controls
• Whether the firm honors the default 6-year FINRA floor but recognizes that specific requirements override the default. Communications are 3-year records, written customer complaints are 4-year records, and customer account information is keyed to after the update and after account closure
• Whether the firm has structural controls in place for the events that test books-and-records survival: nonresident registration (the U.S.-copy mandate for foreign B/Ds), withdrawal from the industry (post-withdrawal custodian designation), and the heightened-supervision regime triggered by hiring concentrations of disciplined-firm registered persons (the Taping Rule)

Two failure patterns produce books-and-records violations independent of the underlying conduct:

• A firm that loses architect-of-compliance authority over its compliance manuals, or fails to preserve a superseded supervisory manual for the full 3-year-after-superseded window
• A firm that adopts cloud storage without the audit-trail or WORM controls, or without independent access

Either is a structural failure that survives even if no record is ever lost. The exam draws supervisory questions from the recordkeeping infrastructure, not just from the records themselves.

Let's start with the umbrella FINRA recordkeeping framework, which establishes the 6-year default and the records-retention format mandate for everything that follows.