Post-Registration Requirements

These duties do not end at registration; they run for as long as the firm stays registered. Each duty traces back to a distinct provision of the Uniform Securities Act (USA), so a question naming one obligation is usually testing whether you know it is ongoing, not one-time.

What Books and Records Must a BD Keep?

Every registered broker-dealer (BD) must make and keep accounts, correspondence, memoranda, papers, books, and other records as the Administrator prescribes by rule or order.

In practice, BD recordkeeping follows federal standards rather than separate state rules.

Records to Be Made

The registrant must make and keep the records required under the Uniform Securities Act, consistent with federal recordkeeping standards. As a practical matter, a BD that satisfies the applicable federal recordkeeping standards is treated as meeting the state requirement. Federal standards require BDs to create and maintain, among other records:

• Blotters (books of original entry) for receipts and deliveries of securities, and receipts and disbursements of cash
• Ledgers reflecting assets, liabilities, income, expenses, and capital
• Customer account records: name, address, investment objectives, authorized persons
• Transaction records for each purchase and sale of securities
• Copies of confirmations sent to customers
• Records of associated persons (agents): names, addresses, dates of employment, compensation
• Written customer complaint records

How Long Must Those Records Be Preserved?

Records for the first 2 years of each retention period must be kept in an easily accessible place. Records may be stored electronically if the format meets applicable federal requirements: either WORM (write once, read many) storage, or an approved audit-trail alternative.

Exam Tip: Gotchas

Blotters, ledgers, and customer account records need 6-year retention. General correspondence and advertising materials need only 3 years. Customer complaint records sit on their own 4-year clock. For all of them, the first 2 years must stay in an easily accessible location.

What Financial Reports Must a BD File?

• Every registered broker-dealer (BD) must file financial reports as the Administrator prescribes by rule or order
• State authority is subject to the limitations of the Securities Exchange Act (SEA); the state cannot impose requirements that conflict with or exceed federal standards

When Must a BD File a Correcting Amendment?

• If information in any document filed with the Administrator becomes inaccurate or incomplete in any material respect, the registrant must file a correcting amendment promptly, unless notification of the correction has already been given through the required notice of an agent's change of connection or a change in the activities that make the agent an agent
• This is an ongoing obligation that does not end once registration becomes effective
• Material changes include: change of address, change in ownership, new disciplinary history, change in financial condition

What Can the Administrator Examine, and When?

The Administrator has broad authority to examine broker-dealer (BD) records:

• All BD records are subject to examination at any time
• The Administrator (or designated representatives) may examine records within or without the state
• Examinations must be reasonable: periodic, special, or as the Administrator deems necessary in the public interest or for investor protection
• To avoid duplication, the Administrator may cooperate with other state administrators, the SEC, national securities exchanges, and national securities associations (such as FINRA)

Consequences of refusal: A BD that refuses to submit to a reasonable examination faces:

• Injunction
• Revocation of registration (if willful)
• Criminal prosecution (if willful)

Exam Tip: Gotchas

The Administrator can examine BD records "at any time" without a subpoena. This is a visitorial power, which is distinct from the Administrator's separate subpoena power. No prior notice or court order is required for a routine examination. The BD must simply make records available.

What Should You Check on Exam Day?

• Books and records and financial-reporting authority both trace to the Administrator's rule- or order-making power, and both are capped by the federal limits on state broker-dealer regulation
• A correcting amendment is required whenever a filed document becomes materially inaccurate, not just at renewal time
• Examination authority reaches records "at any time," within or without the state, without a subpoena

Now that you understand a BD's recordkeeping and reporting obligations, let's look at how firms must supervise the people who work for them.