Welcome to Supervisory Approvals for Accounts: the three-rule framework that makes every new account opening, account change, and transaction binding under FINRA rules.
Exam Weight: Part of 16% (8 questions across Chapter 2)
What You'll Learn
In this unit, you'll cover:
- Supervisory System Framework: The written supervisory procedures (WSPs), principal designations, Office of Supervisory Jurisdiction (OSJ) requirements, and branch office inspection cycle that define how every firm supervises its registered representatives (reps)
- Required Reviews, Approvals, and Documentation: The principal signature that opens accounts under the customer account information rule, the written approval that changes account names under the customer account records rule, discretionary-authority approval under the discretionary accounts rule, and the correspondence and transaction reviews required under the supervision rule
- Physical Receipt, Delivery, and Safeguarding of Customer Assets: The "noon next business day" standard for forwarding checks, subscription-way handling for mutual fund and variable contract applications, and the logging and custody controls WSPs must address
- Refusing, Restricting, and Closing Accounts: When the firm refuses to open, when it restricts existing activity (including senior-investor temporary holds under the senior-investor protection rule), and when it closes the account, all documented and approved by a principal
- Supervisory Control System: The system of supervisory control policies and procedures (SCPs) that tests whether the supervisory procedures actually work, including the annual report to senior management
- Municipal Securities Supervision: The parallel supervisory framework for municipal fund securities, requiring a qualified Series 51 or Series 53 principal for 529 plans, Local Government Investment Pools (LGIPs), and Achieving a Better Life Experience (ABLE) accounts
- Putting It Together: How the supervision rule, the supervisory-control rule, and the MSRB municipal supervision rule operate as complementary (not alternative) layers of the supervisory system
Why This Matters
The Series 6 exam tests whether you can tell:
- Principal vs. supervisor: only a registered principal can sign statutorily required written approvals; supervisors can run day-to-day oversight but final approval authority sits with the principal
- Annual vs. three-year inspections: OSJs and supervising branches must be inspected at least annually; non-supervising branches and non-branch locations on a regular schedule presumed to be at least every three years
- "Subscription-way" handling: customers write the check payable to the mutual fund or insurance company, never to the broker-dealer and never to the rep personally
- "Promptly transmit" standard: no later than noon of the next business day after receipt
- Supervision rule vs. supervisory-control rule: the supervision rule is supervision; the supervisory-control rule is supervising the supervision (testing + annual report to senior management)
- The MSRB municipal supervision rule parallels the FINRA supervision rule: a 529 plan question is a municipal supervision question, requiring a Series 51 or Series 53 principal rather than a Series 26 principal
Every fact supports the principal's approval file, the firm's WSPs, and the rep's ability to document that the supervisory system worked as designed.
Let's start with the supervisory system framework that makes every other approval possible.