Quick Answer
A representative cannot open, change, or refuse an account alone. Opening runs through a principal's documented acceptance signature, post-opening changes need firm review plus a documented customer confirmation, notification, or follow-up, and closing follows the firm's own written procedures. Safeguarding customer cash and securities sits here too.
Who reviews what, in writing, and what the firm owes when holding customer money.
Which One-Liners Win Points?
- Final responsibility for supervision stays with the firm, which designates an appropriately registered principal for each registered business line.
- Written supervisory procedures (WSPs) must be reasonably designed to achieve compliance. The "business, size, structure, and customers" standard belongs to correspondence review instead.
- Control testing is its own duty: principals specifically identified to the Financial Industry Regulatory Authority (FINRA) test and verify the procedures, then report the control system, the test results and significant exceptions, and any procedures amended.
- No account opens without a partner, officer, or manager signing the acceptance, and a registered principal separately reviews in writing all transactions in its investment banking or securities business.
- Correspondence review reaches incoming and outgoing correspondence, including electronic, and internal communications. Complaints, customer instructions, and customer funds and securities always draw it.
- A post-opening change, such as an address or investment objective, needs firm review and a documented customer confirmation, notification, or follow-up. Each controlled transmittal of funds or securities gets the same step, including a hand-delivered check.
- Monetary instruments travel with cash: currency, traveler's checks, negotiable instruments transferable by delivery, incomplete instruments, and bearer securities.
- A firm must promptly obtain and keep possession or control of fully paid and excess margin securities.
Which Numbers Matter Most?
| Item | Value |
|---|---|
| Currency transaction report | more than $10,000 |
| Control-testing report | at least annually to senior management |
Which Gotchas Trip Students Up?
- A verbal principal approval fails however suitable the account; review must be evidenced in writing.
- A risk-based system is allowed, and functions may be delegated to unregistered people with the principal still responsible.
- Merely opening a communication is not review: the record names reviewer, item, and date, and shows an action only where a significant issue turned up.
- Refusing is the flip side of acceptance, but closing is not: the firm's own written procedures govern, and a failed identity check may still require a suspicious activity report.
- Two same-day $6,000 currency transactions by one customer aggregate to $12,000 and are reportable across every domestic branch, and a sound supervisory system never excuses an individual's improper use of customer property.
One-Breath Recap
The firm owns supervision, designates registered principals, and writes and separately tests procedures reasonably designed to achieve compliance, reporting annually to senior management. An account opens only on a partner, officer, or manager's acceptance signature, never a verbal sign-off, and a post-opening change needs review plus documented customer confirmation, notification, or follow-up. Correspondence review may be risk-based, but the record names reviewer, item, and date. Safeguarding covers cash, monetary instruments, and securities, and currency above $10,000 aggregates across a customer's same-day activity.
Need more than the recap? Read the full Supervisory Approvals for Accounts unit.