Planning to take the Series 66 Exam? Then become familiar with FINRA Rule 3210 on Opening Outside Accounts. Why? Because NASAA Series 66 Test Specifications includes this topic in Section IV (H) (4), thus signaling that there can be questions on the test about this rule. Here is the text of Rule 3210:FINRA RULE 3210
Securities Accounts at Other Investment Advisers, Broker/Dealers or Financial Institutions
a) No person associated with a member ("employer member") shall, without the prior written consent of the member, open or otherwise establish at a member other than the employer member ("executing member"), or at any other financial institution, any account in which securities transactions can be effected and in which the associated person has a beneficial interest.
(b) Any associated person, prior to opening or otherwise establishing an account subject to this Rule, shall notify in writing the executing member, or other financial institution, of his or her association with the employer member.
(c) An executing member shall, upon written request by an employer member, transmit duplicate copies of confirmations and statements, or the transactional data contained therein, with respect to an account subject to this Rule.
Bob Eder covers Opening Outside Accounts in his Study for the Series 66 Exam. Here is a sample of Bob Eder's discussion:
Outside Securities
Accounts IV(H)(4)
An
I.A. representative should not open a personal securities account outside of
the firm or its affiliated broker/dealer without first obtaining written
permission from principals of the advisory firm. The firm has a right to ask
for duplicates of confirmations and monthly statements. The purpose of this
rule is to allow the firm and its supervisors to monitor securities activities
of the representative to prevent and detect abuses of securities laws and
regulations, and to make sure that the representative is abiding by all
internal rules of the advisory firm.
Note that if John James, an associated person of Investment Advisory Firm XYZ, opens a personal securities account with Investment Firm ABC, John James is obligated under FINRA Rule 3210 to notify Firm XYZ in writing that he plans to open a securities account with an outside financial firm.
The notification must be in writing. An oral disclosure does not comply with the rule. Furthermore John James must give this notification if a person closely related to John James, such as his spouse or children, or other person to whom John James contributes financial support, opens the account.
Here is the link to NASAA's Test Specifications for the Series 66 Exam. See the references to Opening Outside Accounts in NASAA's Test Specifications, Section II (H) (4).
For questions about Bob Eder's Series 66 manual, Study for the Series 66 Exam, or questions in general about the Series 66 Exam, or about Opening Outside Accounts, feel free to email Bob Eder at bobeder@bobeder.net.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.
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