Need help searching for NYSE rule 405

gwilks98 · 05-25-2003, 01:07 PM

Can someone help me find the NYSE rule 405 ("Know your customer" rule) in its ENTIRETY. I've done the standard google search and I couldn't dig up anything like the verbatum rule from NYSE.com.

From all my searching, all I could find was paraphrasing at best. I'm opening an account with Ameritrade and I think they're inappropriately using this rule to gain more customer info than they need. I'd like to know the rules before I start playing by them, know what I mean?

Can anyone help?

soong · 05-25-2003, 02:43 PM

Rule 405

Under this rule, Member brokerage firms, their partners, officers, managers and registered reps are charged to "use due diligence to learn the essential facts relative to every customer, every order, every cash or margin account accepted or carried" by the firm.

For this reason, every firm is required that a new account form be filed for each prospective customer and approved by the firm's management. Essentially, this is written proof that an individual is legally authorized to open an account. The form varies from firm to firm but all contain at least the following information

Name(s) family and at least one full name. An initial is not sufficient.

Address and tel #. Usually for both residence and business

SSN or TIN required by the IRS to identify dividend recipients and often for transfer agents

Age

Marital status

Occupation/employer/and type of business: certain employees connected financial institutions cannot open an account unless given special approval

Bank Reference

Brokerage Reference: from any other brokerage accounts

Citizenship: non citizens may be subject toi certain taxes on dividends

Cash or Margin account

Relation to the Registered Rep if any

Investment objections

Information about the customers income and assets may also be sought. If more than one person is authorized to trade in the account, their names and occupations should also be included. This is particularly important when a husband and wife have independent accounts.

SUch a form is required of EVERY new account. It must be reviewed and approved by an executive office or general partner of the firm. In some cases a branch manager may provide interim approval while the form is forwarded to the proper official.

Theres lots more regarding customre forms and agreements which include hypothecation, credit agreement, loan consent, options, and power of attorney.

Hope this helps
btw this came from
arco registered rep stockbroker's nasd's series 7 exam prep book.

gwilks98 · 05-27-2003, 10:44 AM

Thanks dude. I'm printing that one out.

did you take your series 7?

soong · 05-27-2003, 11:47 AM

unfortunately... I never got a chance. My wife got pregnant, and I was forced to leave school for a time. I had re-enrolled a year back, but... in my other thread, I said that she's leaving me... so... that kind of puts the screws on me. Have to take care of 5 ppl on one income and try and finish school is going to be a VERY tough job. I'm glad that I was able to help.

05-25-2003, 01:07 PM	#1
gwilks98 Vice Admiral Join Date: Aug 2000 Location: StL Posts: 4,300	Need help searching for NYSE rule 405 Can someone help me find the NYSE rule 405 ("Know your customer" rule) in its ENTIRETY. I've done the standard google search and I couldn't dig up anything like the verbatum rule from NYSE.com. From all my searching, all I could find was paraphrasing at best. I'm opening an account with Ameritrade and I think they're inappropriately using this rule to gain more customer info than they need. I'd like to know the rules before I start playing by them, know what I mean? Can anyone help? __________________ "I know the pieces fit, cause I watched them fall away." "Cold silence has A tendancy to Atrophy any Sense of compassion." MJK

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05-25-2003, 02:43 PM	#2
soong Lieutenant Junior Grade Join Date: Dec 2001 Location: my corner of hell Posts: 188	Rule 405 Under this rule, Member brokerage firms, their partners, officers, managers and registered reps are charged to "use due diligence to learn the essential facts relative to every customer, every order, every cash or margin account accepted or carried" by the firm. For this reason, every firm is required that a new account form be filed for each prospective customer and approved by the firm's management. Essentially, this is written proof that an individual is legally authorized to open an account. The form varies from firm to firm but all contain at least the following information Name(s) family and at least one full name. An initial is not sufficient. Address and tel #. Usually for both residence and business SSN or TIN required by the IRS to identify dividend recipients and often for transfer agents Age Marital status Occupation/employer/and type of business: certain employees connected financial institutions cannot open an account unless given special approval Bank Reference Brokerage Reference: from any other brokerage accounts Citizenship: non citizens may be subject toi certain taxes on dividends Cash or Margin account Relation to the Registered Rep if any Investment objections Information about the customers income and assets may also be sought. If more than one person is authorized to trade in the account, their names and occupations should also be included. This is particularly important when a husband and wife have independent accounts. SUch a form is required of EVERY new account. It must be reviewed and approved by an executive office or general partner of the firm. In some cases a branch manager may provide interim approval while the form is forwarded to the proper official. Theres lots more regarding customre forms and agreements which include hypothecation, credit agreement, loan consent, options, and power of attorney. Hope this helps btw this came from arco registered rep stockbroker's nasd's series 7 exam prep book.

05-27-2003, 10:44 AM	#3
gwilks98 Vice Admiral Join Date: Aug 2000 Location: StL Posts: 4,300	Thanks dude. I'm printing that one out. did you take your series 7?

05-27-2003, 11:47 AM	#4
soong Lieutenant Junior Grade Join Date: Dec 2001 Location: my corner of hell Posts: 188	unfortunately... I never got a chance. My wife got pregnant, and I was forced to leave school for a time. I had re-enrolled a year back, but... in my other thread, I said that she's leaving me... so... that kind of puts the screws on me. Have to take care of 5 ppl on one income and try and finish school is going to be a VERY tough job. I'm glad that I was able to help.

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