The SEC's broker-dealer recordkeeping framework establishes how long broker-dealers must keep their records. The 3-year vs. 6-year framework is one of the highest-frequency exam topics in this unit.
SEC Recordkeeping Overview
- Establishes minimum retention periods for broker-dealer records
- Records must be preserved in a format and media compliant with SEC requirements
- Electronic storage is permitted if it meets WORM (Write Once, Read Many) or equivalent audit-trail requirements
- For all retention periods, the first 2 years the records must be kept in an easily accessible place
Six-Year Records
These are the firm-level and customer-level records that must be retained for 6 years:
| Record Type | Retention Period |
|---|---|
| Blotters (purchase/sale, cash receipts/disbursements, securities received/delivered) | 6 years |
| General ledger | 6 years |
| Customer account records (account cards, new account forms) | 6 years after account closed or record updated |
| Customer account statements (copies) | 6 years |
| Written customer agreements | 6 years after record updated |
| Associated person information (employment records, U4/U5) | 6 years |
| Corporate charter, bylaws, partnership agreements | Life of enterprise + 6 years |
Think of it this way: If a record describes who the customer is or how the firm operates, it gets 6 years. Account cards, agreements, statements, and blotters all paint the big picture of the customer relationship or firm activity.
Exam Tip: Gotchas
- Blotters are 6 years even though they record transactions. They are aggregate firm-level records (daily summaries), not individual transaction documents. The exam tests whether you know this distinction.
Three-Year Records
These are typically transaction-level and communication records:
| Record Type | Retention Period |
|---|---|
| Customer confirmations (copies) | 3 years |
| Order tickets | 3 years |
| Trial balances | 3 years |
| Communications (internal memos, correspondence) | 3 years |
| Advertising and sales literature | 3 years from last use |
| Written supervisory procedures (WSPs) | 3 years after termination of use |
Exam Tip: Gotchas
- WSPs are 3 years after termination of use under the SEC recordkeeping framework. They are not in the 6-year category despite being firm-level documents.
- Advertising retention starts from last use, not from creation date. A brochure used for 2 years must be kept for 3 more years after the firm stops using it.
Special Retention: Written Complaints
- Written complaints: 4 years under the customer-complaint recordkeeping rule
- Complaints do not fit neatly into the 3-year or 6-year category, making this a frequent exam question
Exam Tip: Gotchas
- Written complaints = 4 years. This is the only major record type that falls outside the standard 3-year and 6-year periods. If you see "complaints" in a retention question, the answer is almost always 4 years (under the customer-complaint recordkeeping rule).
Sorting It Out: 3 Years vs. 6 Years
Memory Aid:
6-Year Records (Customer/Firm) 3-Year Records (Transaction/Communication) Account cards and new account forms Confirmations Account statements Order tickets Written agreements Trial balances Blotters and general ledger Correspondence and memos Employment records (U4/U5) Advertising (from last use) WSPs (after termination of use) Pattern: Records about the customer (account info, agreements, statements) = 6 years. Records about individual transactions (confirmations, order tickets) = 3 years.
General Recordkeeping Requirements
- Default retention period when no specific rule applies: 6 years
- Records must be preserved in a format and media compliant with the SEC broker-dealer recordkeeping framework
Think of it this way: If you cannot find a specific retention period for a record in the rules, default to 6 years. FINRA's books-and-records rule acts as the catch-all.
MSRB Books-and-Records Rules
For municipal securities dealers, the Municipal Securities Rulemaking Board (MSRB) has its own books-and-records framework:
- The MSRB recordkeeping rule specifies which books and records must be created and maintained
- The MSRB retention rule specifies retention periods for municipal securities records
- Municipal transaction records: minimum 6 years
- Customer complaint records: minimum 6 years
Exam Tip: Gotchas
- MSRB complaint retention is 6 years, not 4. FINRA requires 4 years for complaints, but the MSRB requires 6 years. If the question specifies municipal securities, the answer is 6 years under the MSRB recordkeeping retention rule.