Account Communications and Records

The whole unit on one sheet: confirmation contents, statement frequency, the transfer clock, and retention periods.

What Do Confirmations, Statements, and Transfers Require?

• Confirmations: written, sent no later than the settlement date, for every transaction. Must show trade date, settlement date, security, quantity, price, capacity, commission on agent trades, net amount, and accrued interest on debt. Markup/markdown disclosure is narrower: corporate and agency debt, non-institutional customer, same-day offsetting trade.
• Capacity: agent (broker) = commission; principal (dealer) = markup or markdown. A firm cannot act as both in the same transaction.
• Statements: at least quarterly for any account with a position, balance, or activity. There is no general monthly requirement: monthly applies only to penny stock positions and to an options account at an exchange member in a month it had an entry. Active/margin monthly statements are firm practice, not rule.
• Account value: statements show current market value (unrealized). Only realized gains and losses are taxable, reported on Form 1099-B.
• Transfers: the customer initiates at the receiving firm through the Automated Customer Account Transfer Service (ACATS); the carrying firm validates in 1 business day and delivers in 3 business days after validation.

Which One-Liners Win Points?

• Deadline is settlement date, not trade date. A confirmation sent after execution but before settlement is on time.
• Accrued interest is a debt-confirmation item, not an equity one.
• Free credit balances must be available on request. Pledged margin securities can be released early if post-withdrawal equity stays at least the greater of $2,000 or the maintenance requirement; a debit balance alone does not block it.
• Tendering capacity = net long position (long minus short, across all accounts). Short tendering is prohibited.
• Address-change notice goes to the OLD address, within 30 days, as a fraud early-warning.

Which Numbers Matter Most?

What Is the Memory Aid for Sorting 3 Years vs. 6 Years?

• Records about how the firm operates, or the terms of opening and maintaining the account (account cards, blotters, general ledger) = 6 years. Associated-person records (U4/U5) and fingerprint records = 3 years after termination.
• Everything else = 3 years: customer statements, written agreements, confirmations, order tickets, trial balances, correspondence, advertising, written supervisory procedures. The word "customer" is the trap; statements and agreements are 3 years.
• Advertising and written supervisory procedures run from last use / termination of use, not creation.
• Default when no specific rule applies = 6 years.

Which Gotchas Trip Students Up?

• Blotters are 6 years even though they record transactions; they are aggregate daily summaries.
• Written complaints = 4 years under FINRA, the only major record outside the 3/6-year buckets; MSRB complaints = 6 years.
• An account with no trades but a cash balance still gets a quarterly statement; only DVP/RVP accounts meeting all four criteria can skip.
• The firm cannot tender customer shares without authorization, even "in the customer's best interest."
• A trusted contact person can be declined; the firm makes reasonable efforts and may still open the account (institutional accounts exempt). The firm must disclose in writing, at account opening and again when updating, that it may contact the TCP.
• MSRB retention is not FINRA's 6-year/3-year split. Munis run 6 years (blotters, account records, complaints, suitability records) vs. 4 years, 3 for bank dealers (confirmations, most transaction records).
• The receiving firm initiates ACATS and cannot partially reject; transfer agents answer to the SEC, not FINRA.
• Dividends and interest count as account activity, so an account receiving them is not dormant for escheatment.
• Reg FD applies to issuers, not broker-dealers: intentional selective disclosure must be simultaneous.

One-Breath Recap

Confirmations disclose capacity by settlement date, statements run quarterly, monthly for penny stock or option-entry accounts, and only realized gains are taxable. Account transfers move through the Automated Customer Account Transfer Service on a one-then-three business-day clock, address changes ping the old address within thirty days, and records keep for lifetime, six, four, or three years. Nail the capacity split, the transfer clock, and the retention ladder, and this unit answers itself.

Need more than the recap? Read the full Account Communications and Records unit.