Numbered Accounts and Customer Statements

The numbered-account framework prevents accounts from being carried in fictitious names while still allowing legitimate numbered accounts for privacy. The customer-statement framework keeps customers informed of position and activity. Together they ensure the customer's account is correctly attributed and regularly reported.

Designation of Accounts

The numbered-account requirement states the general rule and a single exception:

• General rule: a member may not carry an account on its books in the name of any person other than the customer
• Exception: an account may be designated by a number or symbol, provided the firm has on file a written statement signed by the customer attesting to ownership of the account

The purpose is twofold:

• Prevent accounts from being carried in fictitious names to mask the true beneficial owner (a fraud and money-laundering protection)
• Allow legitimate numbered accounts for privacy reasons (a high-net-worth customer who does not want their name printed on every confirmation, for example)

What Numbered Accounts Are and Are Not

A numbered account is not a secret account. The firm knows exactly who the customer is; the customer's name simply does not appear in the account designation on confirmations and statements. The firm holds the customer-signed ownership statement in the customer file and produces it on demand to regulators.

What is prohibited is carrying an account in someone else's name (a friend, a spouse, a nominee) while the actual beneficial owner is someone different. That crosses into the commercial-honor standard and federal fraud territory.

Exam Tip: Gotchas

• A numbered account is legal as long as the firm holds a signed customer statement attesting to ownership. What is prohibited is carrying an account in the name of someone who is not the actual owner (e.g., using a friend's name to mask the true beneficial owner). That crosses into the commercial-honor standard and fraud territory.
• Numbered accounts are not anonymous accounts. The firm must know the customer's true identity for CIP and AML purposes. The numbered designation only changes how the account appears on outward-facing documents.

Customer Account Statements

The customer-statement requirement governs the firm's obligation to send periodic statements. Each general securities member must:

• Send a statement of account at least once every calendar quarter to each customer whose account had a security position, money balance, or account activity during the period since the last statement

The statement must include:

• A description of securities positions, money balances, and account activity since the last statement
• A statement advising the customer to report promptly any inaccuracy or discrepancy to the firm (and, when applicable, to both the introducing and carrying firms)

Most firms send statements monthly for accounts with activity and quarterly for accounts without monthly activity, though the customer-statement requirement only mandates the quarterly cadence at minimum.

Quarterly Delivery Exception (DVP/RVP)

The customer-statement framework allows a firm to suspend quarterly statements for an account if all four of these conditions are met:

This exception exists because DVP/RVP accounts are essentially pass-through trade-execution accounts; the customer typically uses a separate custodian for asset holding. Sending a quarterly statement showing nothing is wasteful.

Exam Tip: Gotchas

• The DVP/RVP exception requires all four conditions. A firm that drops three of the conditions but cannot get the customer's written consent must still send the quarterly statement.
• The minimum cadence is quarterly, not monthly. Many firms send monthly because their systems are built that way, but the customer-statement requirement only requires quarterly. Watch for exam questions that mistakenly cite a monthly minimum.

The SEC Account-Records Requirement

The SEC books-and-records framework requires every broker-dealer to make and keep a record of every cash and margin account with the firm, identifying the account holder by name and address.

This is the books-and-records foundation under the numbered-account framework: the firm must always be able to identify who owns each account, even if the account is designated by number or symbol on outward-facing documents.

The SEC Customer-Account-Record Requirement (Natural Persons)

For each account with a natural person as customer or owner, the SEC customer-account-record requirement obligates the firm to keep:

• The account information collected per the FINRA customer-account-information requirement (or equivalent)
• The signature of the registered representative servicing the account
• The approval of a principal
• An update record indicating any subsequent changes to required information

The SEC customer-account-record requirement is the SEC-level mirror of the FINRA customer-account-information requirement: the FINRA layer says what to collect; the SEC layer says what to record and preserve.

Exam Tip: Gotchas

• The FINRA customer-account-information requirement and the SEC customer-account-record requirement operate as a pair. The FINRA layer specifies the data collection; the SEC layer specifies the recordkeeping. The exam may ask which requires the principal's signature; the answer is both require it.

Address Changes and Retention

The SEC address-change notice rule requires:

• The broker-dealer must furnish promptly to a customer (of which the firm has actual knowledge of an address change) an updated record (or notice) reflecting the change

This is a customer-protection rule against the registered representative who quietly redirects customer correspondence to a different address (often the rep's own address or a P.O. box) to hide activity from the customer. The rule forces the firm to send the address-change confirmation to the previous address as well, so a customer whose mail has been redirected without their consent sees the change immediately.

The SEC customer-account-record retention requirement provides:

• Customer account records made pursuant to the SEC customer-account-record requirement must be retained for the life of the account plus 6 years after the account is closed
• The most recent 2 years must be in an easily accessible place

Exam Tip: Gotchas

• Customer account records are kept for life of the account plus 6 years after closure. This is the most-tested retention period in the broker-dealer rulebook. Pair it with the CIP 5-year-after-closure retention: different records, different windows.
• The SEC address-change rule sends the confirmation to the previous address. This is a fraud-detection mechanism. The exam may describe a registered representative who changed the customer's address without telling the customer; the rule forces the firm to send the confirmation to the old address too, exposing the change.

Tying the Recordkeeping Pillars Together

Account-opening recordkeeping is governed by a stack of overlapping rules:

• FINRA customer-account-information requirement specifies what customer information to collect
• The SEC books-and-records framework requires a record of every account identifying the holder
• The SEC customer-account-record requirement preserves the customer account record for natural persons (including the FINRA-collected data, signatures, approvals, updates)
• FINRA numbered-account requirement governs how the account is designated (numbered accounts allowed with signed ownership statement)
• FINRA customer-statement requirement mandates quarterly customer statements
• The SEC address-change notice rule requires address-change notices
• The SEC customer-account-record retention requirement requires 6-year-after-closure retention of account records

A firm that complies with one requirement but not the others has gaps. The exam tests the gaps directly.

Exam Tip: Gotchas

• Multiple requirements, one customer file. A complete account-opening file satisfies the FINRA customer-account-information collection, the SEC books-and-records and customer-account-record requirements, the numbered-account framework, the customer-statement requirement, the SEC address-change rule, and the SEC customer-account-record retention requirement at the same time. The exam will sometimes describe a partial file and ask which is violated; the answer often turns on one missing element (the principal's signature, the quarterly statement, the address-change notice).