8.1. Opening an Account

To open an individual account, a client must fill out a new client account form, which is kept at the brokerage firm.

The information on a new account that is required for each customer is:

•Customer name and address

•Whether the client 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 cash or margin account

•Third-party authorization (if any)

•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 neither the client’s signature nor his educational background needs to be on the new account form. Suitability information, which helps determine whether investments are suitable for a customer, is italicized