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3.5 Account Registration

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Securities Industry Essentials SIE

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1 Introduction

About the SIE Exam How to Use This Course

2 Chapter 1: Knowledge of Capital Markets

1.1 Regulatory Bodies 1.2 State Regulation 1.3 Market Participants 1.4 Types of Markets 1.5 The Exchanges 1.6 OTC Markets 1.7 Economic Policies 1.8 Interest Rates 1.9 Business Cycles 1.10 International Economics

3 Chapter 2: Understanding Products and Their Risks

2.1 Common Stock Basics 2.2 Corporate Actions 2.3 Preferred Stock 2.4 ADRs 2.5 Bond Basics 2.6 Yields 2.7 U.S. Treasury Securities 2.8 Corporate Bonds 2.9 Municipal Bonds 2.10 Money Market Instruments 2.11 Options Basics 2.12 Hedging Strategies 2.13 Mutual Funds 101 2.14 Mutual Fund Fees 2.15 ETFs 2.16 UITs & REITs 2.17 DPPs 2.18 Systematic Risk 2.19 Non-Systematic Risk 2.20 Mitigation Strategies

4 Chapter 3: Trading, Customer Accounts and Prohibited Activities

3.1 Order Types 3.2 Trade Settlement 3.3 Quoting 3.4 Account Types 3.5 Account Registration 3.6 Retirement Plans 3.7 Education Savings 3.8 AML Rules 3.9 Market Manipulation 3.10 Insider Trading 3.11 Customer Protection

5 Chapter 4: Overview of Regulatory Framework

4.1 Registration 4.2 Continuing Education 4.3 Employee Conduct 4.4 Correspondence

3.5 Account Registration

Key Takeaways Explain This Topic AI

FINRA Rule 4512 requires firms to obtain essential customer information including name, address, date of birth, SSN, and occupation

Firms must make reasonable efforts to obtain a Trusted Contact Person (TCP) for non-institutional accounts to help protect against financial exploitation

The Customer Identification Program (CIP) under the USA PATRIOT Act requires firms to collect identifying information before opening an account and to verify identity, using documents, non-documentary methods or both, within a reasonable time before or after the account is opened

Customer account records must be maintained for 6 years after the account is closed

The TCP may be contacted for concerns about customer exploitation or diminished capacity but has no authority to transact in the account

Last updated: October 2026

When opening a brokerage account, firms must collect and maintain specific customer information. FINRA Rule 4512 governs these requirements.

FINRA Rule 4512: Customer Account Information

FINRA Rule 4512 requires broker-dealers to obtain and maintain "essential facts" about each customer account.

Required Information for All Accounts

  • Information Requirement
  • Customer name Required
  • Residence address Required (P.O. Box not sufficient alone)
  • Date of birth Required
  • Legal age verification Required
  • Tax ID / SSN Required
  • Occupation Required
  • Employer name and address If employed
  • Associated person(s) responsible Required
  • Additional Information for Margin Accounts

Beyond basic requirements, margin accounts require:

  • Net worth
  • Annual income
  • Investment experience
  • Investment objectives
  • Signed margin agreement
  • Trusted Contact Person (TCP)

FINRA Rule 4512 requires firms to make reasonable efforts to obtain a Trusted Contact Person for non-institutional accounts.

TCP Requirements

  • Aspect Requirement
  • Who Person 18 or older
  • Relationship Someone customer trusts
  • Purpose Contact for concerns about customer
  • Required Reasonable effort to obtain
  • When Firms May Contact TCP
  • Address possible financial exploitation
  • Confirm customer contact information
  • Confirm health status
  • Identify legal guardian or power of attorney

Important: The TCP is NOT authorized to transact in the account. They are only a contact resource.

Purpose of TCP Rule

The TCP provision helps protect investors, especially seniors, from:

  • Financial exploitation
  • Diminished capacity issues
  • Unauthorized account access
  • Know Your Customer (KYC)

The Know Your Customer rule requires firms to:

  • Use reasonable diligence to know the customer
  • Understand essential facts about the customer
  • Know the customer's financial situation and needs

Essential Facts Include:

  • Category Examples
  • Identity Name, address, DOB, SSN
  • Financial Income, net worth, liquid assets
  • Investment Experience, objectives, risk tolerance
  • Employment Employer, occupation
  • Customer Identification Program (CIP)

Under the USA PATRIOT Act , firms must verify customer identity:

CIP Requirements

  • Requirement Details
  • Documents Accepted Documents (such as an unexpired government-issued photo ID) and/or non-documentary methods
  • Information Verified Name, DOB, address, SSN
  • Timing Collect information before opening; verify within a reasonable time before or after opening
  • Purpose Prevent money laundering/terrorism
  • Acceptable ID Documents
  • Driver's license
  • Passport
  • State-issued ID
  • Military ID
  • Account Documentation
  • New Account Form

Contains all required customer information:

  • Personal information (name, address, DOB)
  • Employment information
  • Financial information
  • Investment profile
  • Signatures
  • Customer Agreement

Outlines terms and conditions including:

  • Rights and responsibilities
  • Fee schedules
  • Arbitration agreement
  • Margin disclosure (if applicable)
  • Required Signatures
  • Document Signature Required
  • New account form Principal and customer
  • Margin agreement Customer
  • Options agreement Customer
  • Discretionary authorization Customer
  • Account Approval Process
  • Steps to Open an Account
  • Application - Customer completes new account form
  • Verification - Firm verifies identity (CIP)
  • Review - Associated person reviews for completeness
  • Approval - Principal (supervisor) approves
  • Documentation - Customer receives copies
  • Principal Approval

A registered principal must approve:

  • New account openings
  • All trades in the account (typically)
  • Changes to account information
  • Record Retention Requirements

FINRA and SEC rules specify retention periods:

  • Record Type Retention Period
  • Account records 6 years
  • Customer information updates 6 years after update
  • Original/final account info 6 years after account closes
  • Trade confirmations 3 years
  • Communications 3 years

Note: "Maintain" = current/in-use records. "Preserve" = no longer current records.

  • Account Updates
  • When Updates Are Required
  • Customer notifies firm of changes
  • Annual review/verification
  • Before making recommendations
  • When circumstances indicate changes
  • Information That May Change
  • Address
  • Employment status
  • Income/net worth
  • Investment objectives
  • Risk tolerance
  • Institutional vs. Non-Institutional Accounts

Different requirements apply based on account type:

Institutional Account (per FINRA)

Includes accounts of:

  • Banks and insurance companies
  • Registered investment companies
  • Registered investment advisers
  • Entities with $50+ million in assets
  • Different Treatment
  • Requirement Institutional Non-Institutional
  • TCP Not required Required effort
  • Suitability Different standards Full analysis
  • Disclosure May be modified Full required
  • Account Transfer (ACATS)

The Automated Customer Account Transfer Service (ACATS) enables account transfers between broker-dealers:

  • Timeline Event
  • Day 1 Receiving firm initiates transfer
  • Day 3 Carrying firm validates/rejects
  • Day 6 Transfer completed
  • Key Takeaways
  • FINRA Rule 4512 requires essential customer information
  • Trusted Contact Person protects vulnerable investors
  • CIP verifies identity under USA PATRIOT Act
  • Principal approval required for new accounts
  • Records must be maintained for 6 years
  • Updates required when circumstances change