Welcome to Books, Records and Regulation FD, the unit that covers what a firm must write down, how long it must keep it, and who outside the firm has a separate duty to disclose material information fairly.
Exam Weight: 2 scored items within Function 3 (13 items / 26% of exam)
What You'll Learn
In this unit, you'll cover:
- Books and Records a Firm Must Make: the core categories of records a firm creates, from blotters to order memoranda, and FINRA's own layered books-and-records framework
- Retention Periods for Books and Records: how long each record type must be kept, and what starts the clock for each one
- Electronic Recordkeeping and Where Records Must Live: the two acceptable ways to preserve records electronically, the undertaking a firm files with its regulator, and the office-location rule
- Ceasing Business and Continuing Record Retention: what happens to a firm's records after it stops doing business, and why the original retention periods keep running
- The Recordkeeping Link to the Bank Secrecy Act: how a separate recordkeeping bridge rule ties a firm's currency and foreign-transaction records back to federal anti-money-laundering requirements
- Educational Communication on Recruitment and Account Transfers: when a firm must deliver FINRA's educational communication to a registered person's former customers, and how long that duty runs
- Regulation FD: Selective Disclosure by Issuers: who must publicly disclose material nonpublic information, on what timeline, and which disclosures are excluded entirely
Why This Matters
A private-placement representative's day-to-day work generates records: order tickets, customer files, correspondence with issuers. Every one of those records carries its own retention period, and the exam tests the period, the trigger that starts it, and the accessibility standard that goes with it as separate, gradable facts.
Regulation FD adds a different kind of test. It does not regulate the representative directly, but it shapes how an issuer can share information during a private placement, and a representative who does not understand the issuer's disclosure duty can misjudge what a confidentiality agreement actually protects.
Let's start with the books and records a firm must make.