Purpose – The purpose of this paper is to explain newly approved Financial Industry Regulatory Authority (FINRA) books and records rule (Rules 2268, 4511, 4513, 4514, 4515, 5340, and 7440(a)(4)) that will go into effect on December 5, 2011. Design/methodology/approach – The paper highlights the principal new compliance obligations for FINRA members set forth in these rules, including a default six‐year retention period for books and records; requirements to maintain names of associated persons responsible for accounts, to maintain signatures of persons with discretionary authority, to update account records, to preserve files of written customer complaints, to maintain account information after updating and account closure, to maintain authorization records for negotiable instruments, and to document changes in account names and designations; expansion of the deadline for post‐execution allocation to customer accounts; and disclosure requirements for pre‐dispute arbitration agreements. Findings – In addition to consolidating and replacing existing requirements of existing NASD and NYSE rules, the new FINRA rules will impose a number of significant additional requirements for FINRA members. Originality/value – The paper provides practical guidance from experienced financial services lawyers.
Journal of Investment Compliance – Emerald Publishing
Published: Sep 13, 2011
Keywords: Compliance; Books and records; Record retention; Discretionary accounts; Customer complaints; Customers; Lawyers