Quick Answer
Retail brokerage services on financial-institution premises where retail deposits are taken require four spoken and written warnings. Regulation S-P privacy notices carry applicable content, including an opt-out explanation only when that right applies. A state may never demand broker-dealer records beyond the federal standard, and execution or cancellation time enters an order memorandum only to the extent feasible.
The whole unit on one sheet: what must be disclosed, the numbers behind each document, and the limits on the Administrator's reach.
What Must Be Disclosed at a Financial Institution?
These requirements apply to retail brokerage services on financial-institution premises where retail deposits are taken.
- Four disclosures: NOT insured by the FDIC or NCUA, NOT deposits or obligations of the institution, NOT guaranteed by it, and subject to investment risk including possible loss of principal.
- They must be both oral AND written. One alone is not enough.
- Both are due at or before opening the account, not at each later transaction. Confirmations and statements need only identify the broker-dealer as the securities-services provider.
Which Document Numbers Must You Lock In?
For ordinary dealer aftermarket transactions, prior Exchange Act reporting immediately before filing removes the delivery period regardless of listing. Otherwise, the periods below run from the later of effectiveness or the first bona fide public offering. Dealer-underwriter, unsold-allotment, and other special rules can differ.
| Document | Rule |
|---|---|
| Ordinary dealer period, issuer already reporting immediately before filing | None, listed or unlisted |
| Ordinary dealer period, qualifying listed IPO, issuer not previously reporting | 25 days |
| Ordinary dealer period, unlisted IPO, issuer not previously reporting | 90 days |
| Ordinary dealer period, unlisted follow-on, issuer not previously reporting | 40 days |
| Preliminary prospectus, issuer without a prior Exchange Act reporting duty | generally at least 48 hours before the confirmation is sent |
| Customer purchase in an offering under NASAA's broker-dealer policy | final prospectus, or preliminary prospectus plus all final information, by the confirmation due date |
| Primary-offering municipal sale using the official-statement route | official statement by settlement; earlier delivery also complies |
| Account statements | generally quarterly; monthly for an options-entry month and normally for covered penny-stock accounts, subject to exemptions |
What Do the Privacy and Records Rules Require?
- Initial and annual notices use the same applicable content list. An opt-out explanation belongs in the notice when the firm makes a nonaffiliate disclosure outside an exception and the consumer has that right.
- Regulation S-P lets a federally covered firm skip the annual notice in narrow cases. The NASAA state-adviser rule has no such exception: always deliver, every year.
- An existing opt-out remains effective until revoked. Service-provider and joint-marketing treatment requires the proper purpose, initial notice, and restrictive contract. Affiliate sharing is outside the basic nonaffiliate rule, but separate federal affiliate opt-outs may apply.
- Records: blotters and ledgers 6 years; confirmations, statements, and communications 3 years, first 2 easily accessible; written complaints 4 years.
- Order memoranda require terms, receipt time, and entry time. Execution or cancellation time is required to the extent feasible.
- A state may require records only consistent with the federal standard and cannot exceed it.
Which Gotchas Are Tested Most?
- Monthly statements normally apply to covered penny-stock accounts and options accounts with an options entry that month. After six consecutive calendar months without a penny-stock transaction, quarterly statements may replace monthly ones for immediately subsequent quarters without such transactions.
- The municipal official-statement deadline tested here belongs to a primary-offering customer sale where that route applies, not an ordinary secondary trade.
One-Breath Recap
For retail brokerage services on financial-institution premises where retail deposits are taken, the four disclosures are oral and written at or before account opening. Prior Exchange Act reporting removes the ordinary dealer prospectus period; otherwise, qualifying listed IPOs use 25 days, unlisted IPOs 90, and unlisted follow-ons 40. Statements are generally quarterly, with special monthly rules for penny stocks and options entries. Confirmations disclose capacity and the trade's date, security, price, and quantity, with the settlement date added for National Market System (NMS) and over-the-counter stock. A state may never demand records beyond the federal standard.
Need more than the recap? Read the full Required Product Disclosures unit.