Customer Information
MSRB Rule G-19(a) requires every municipal securities dealer and broker (collectively “dealers”) to obtain certain information about a customer before the completion of the first transaction in their account. To open an account, a customer typically fills out a new client account form. The form should record the following information:
- • Name
- • Residential or business address
- • Date of birth (to ensure that the customer is of legal age)
- • Social security or tax ID number
- • Occupation and employer (and disclosure of whether the customer is employed by another broker-dealer)
- • Employer’s address
- • Whether it is a cash or margin account
- • Any third-party trading authorization or discretionary authorization
- • Suitability information, such as a customer’s financial status, tax status, investment objectives, and other information necessary to make a recommendation
- • A pre-dispute arbitration agreement, if applicable
- • Any written authorization to release the customer’s account information
- • A signed hypothecation agreement, if applicable
- • Registered representative’s signature
- • Signature of the principal
Note that neither the client’s signature nor his educational background needs to be on the new account form. However, a client may need to provide a signature for specific agreements included in the account. For example, the customer may need to sign a third-party trading authorization, a hypothecation agreement if opening a margin account, or a pre-dispute arbitration clause, depending on the dealer and the account.
Generally, the MSRB requires that all the information listed above that is applicable to the customer be obtained, because the information is basic and important. However, where a dealer has made reasonable efforts to obtain suitability information, such as customer