1.2.1 Opening an Account
To open an individual account, a customer must fill out a new customer account form, which is kept at the brokerage firm.
To open a new account, the following information must be obtained for each customer:
- • Customer name and address
- • Whether the customer is of legal age
- • Name of registered reps who will handle the account (not a requirement for institutional accounts)
- • Principal’s signature
- • If the customer is a corporation, the name of the person who will transact business in the account
If the account is for an individual (who is not simply purchasing unsolicited mutual funds), the broker should make reasonable efforts to obtain the following before the settlement of the first transaction in the account:
- • Social Security number or tax ID number (note that this information must be provided to verify the person’s identity)
- • Occupation of customer and address of employer
- • Whether the customer is employed by a bank or broker-dealer
- • For discretionary accounts, the dated signature of the person authorized to make trades in the account
The firm should also make reasonable efforts to collect the following additional information:
- • Whether officer or director at publicly held company
- • Citizenship
- • Whether a cash or margin account
- • Third-party authorization (if any)
- • Name of trusted contact person (for non-institutional accounts)
- • Customer’s age
- • Investment experience
- • Investment time horizon and liquidity needs
- • Risk tolerance
- • Financial situation and needs
- • Investment objectives and other holdings
- • Estimated annual income
- • Tax status
Note that