Every product we’ve discussed so far is bought and sold through brokerage accounts. Broker-dealers maintain these accounts, and investors use them to buy and sell securities. In this unit, you’ll learn about different types of brokerage accounts and the key rules and regulations that apply to them.
Account statements give you a historical record of account activity, the value of the securities you hold, and your overall account balances. Broker-dealers are required to provide customers with a clear, transparent view of their assets. At a minimum, firms must send account statements to customers quarterly (every three months). However, firms must send statements monthly if a customer holds penny stocks in the account. Statements may also be delivered electronically (such as by email) if the customer requests it.
Penny stock
An unlisted stock (one that does not trade on a stock exchange) trading below $5 per share
Firms must send statements consistently by mail unless the investor chooses electronic delivery. Even so, customers can ask the firm to hold their mail for short periods.
For up to three months, customers may request that statements be held for any reason. To hold mail longer than three months, the customer must submit a written request and provide a legitimate reason (e.g., military deployment, safety, and security-related issues).
FINRA’s rule on holding mail does not explicitly state how often mail can be held. For example, there is no rule against a customer requesting mail be held for three months, then taking a month break, then requesting another hold for three months. All that is required is for the firm to determine “reasonable intervals” for the mail hold instructions to apply. Additionally, firms must educate their customers on other ways to obtain their mail securely (e.g., by email).
Key points
Quarterly statements
Can be sent by mail or electronically
Monthly statements
Sent if penny stocks held in account
Can be sent by mail or electronically
Holding mail
Can hold customer mail for up to 3 months
May be held indefinitely for legitimate reason (e.g., safety, security)
Every product we’ve discussed so far is bought and sold through brokerage accounts. Broker-dealers maintain these accounts, and investors use them to buy and sell securities.