Quick Answer
Selling securities at a bank requires the four "not insured, not a deposit, not guaranteed, may lose value" disclosures, both spoken and written. Brochure delivery timing splits by registrant type. Privacy notices go out at onboarding and annually, and a state may never demand records beyond the federal standard.
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?
- 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?
| Document | Rule |
|---|---|
| Prospectus delivery, listed IPO | 25 days after effectiveness |
| Prospectus delivery, unlisted IPO | 90 days |
| Prospectus delivery, unlisted follow-on | 40 days |
| Preliminary ("red herring") prospectus | at least 48 hours before the confirmation mails |
| Account statements | quarterly, except monthly for penny stocks |
How Does Brochure Delivery Split by Registrant?
- Federal covered advisers: deliver before or at the time of entering the advisory contract.
- State-registered advisers: deliver at least 48 hours before signing, OR at signing if the client may cancel penalty-free within 5 business days. The 2010 federal simplification never touched this rule.
- Annual update or offer within 120 days of fiscal year-end, but only if there are material changes. The Form ADV amendment itself is due within 90 days. Two clocks, two audiences.
What Do the Privacy and Records Rules Require?
- Initial privacy notice at account opening, annual notice after, and an opt-out notice before sharing nonpublic personal information with nonaffiliated third parties.
- 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.
- Records: blotters and ledgers 6 years; confirmations, statements, and communications 3 years, first 2 easily accessible; written complaints 4 years.
- A state may require records only consistent with the federal standard and cannot exceed it.
Which Gotchas Are Tested Most?
- 48-hour brochure delivery is not obsolete. It died only for SEC-registered advisers; state-registered advisers still use it.
- Monthly statements are the exception, true only for penny stocks. Everything else is quarterly.
One-Breath Recap
Securities sold at a bank need all four disclosures, both orally and in writing, at or before account opening. Prospectus delivery runs 25, 90, or 40 days by listing and offering type, statements are quarterly except monthly for penny stocks, and confirmations disclose capacity, price, and settlement. Brochure timing splits by registrant, with state-registered advisers still owing 48 hours' notice or a 5-day cancellation right, and a state may never demand records beyond the federal standard.
Need more than the recap? Read the full Required Product Disclosures unit.