Customer Account Statements
With confirmations covering individual transactions, the next layer of customer communication is the periodic account statement. FINRA Rule 2231 governs how often statements must be sent and what they must include.
FINRA Rule 2231 - Statement Requirements
- Firms must send account statements at least quarterly to every customer whose account had a security position, money balance, or account activity during that period
- Statements must include a description of all positions, balances, and activity
- Must include an advisory that customers should report promptly any inaccuracy or discrepancy
Key point: Quarterly is the minimum - many accounts require more frequent statements.
Statement Frequency by Account Type
| Account Type | Frequency | Why |
|---|---|---|
| Active accounts (monthly activity) | Monthly | Frequent trading requires timely reporting |
| Options accounts | Monthly | Frequent position changes and expirations |
| Margin accounts (with debit balance) | Monthly | Ongoing interest charges and margin requirements |
| Penny stock accounts | Monthly | SEC Rule 15g-6 requires it |
| Standard accounts (some activity) | Quarterly (minimum) | FINRA Rule 2231 baseline |
| Inactive accounts (holding positions) | Quarterly | Positions or balances still need reporting |
Inactive and DVP/RVP Accounts
- Accounts with no activity but holding security positions or money balances still require quarterly statements
- DVP/RVP accounts (delivery versus payment / receive versus payment) may be exempted from quarterly statements if all four conditions are met:
- Account is carried solely for DVP/RVP transactions
- All transactions conform to FINRA Rule 11860
- No security or money positions at quarter-end (temporary positions like fails to deliver do not count)
- Customer consents to suspension of statements in writing
- Even when exempt, the firm must provide any statement promptly upon request
Think of it this way: DVP/RVP accounts are institutional accounts where securities and payment change hands simultaneously. If nothing is left in the account at quarter-end and the customer agrees in writing, there is nothing to report.
Exam Tip: Gotchas
An account with no trades but holding a cash balance still receives a quarterly statement. The exam may describe an account with "no activity" and a small money balance: it still gets a statement. Only DVP/RVP accounts meeting all four exemption criteria can skip quarterly statements.
Penny Stock Statement Requirements (SEC Rule 15g-6)
- Broker-dealers that have sold penny stocks must send account statements monthly to customers holding penny stock positions
- Statements must be delivered within 10 days after the end of the applicable period
- Must include the identity and number of shares of each penny stock held and its estimated market value
- Must include a conspicuous legend warning that the estimated value may be based on a limited number of trades or quotes, and that the customer may not be able to sell the securities at the stated price
- If the broker-dealer has not effected any penny stock transactions in the account for six consecutive months, the firm may switch to quarterly statements for subsequent quiet quarters
Exam Tip: Gotchas
Penny stock statements require a specific warning legend about limited pricing data, not just a generic "high-risk" notice. Also, the monthly requirement can drop to quarterly after six consecutive months of inactivity in that account.
Statement Content and Discrepancies
- Statements must advise customers to report promptly any inaccuracy or discrepancy to the brokerage firm
- Any oral communication about a discrepancy should be confirmed in writing to protect the customer's rights, including rights under the Securities Investor Protection Act (SIPA)
- When both an introducing firm and a carrying (clearing) firm service the account, the statement must direct the customer to report discrepancies to both firms