Record retention requirements

Broker-dealers are required to keep certain books and records on file. If there’s a problem during a customer interaction or a broader business issue, those records help show what happened and when it happened. Retention periods range from 3 years to the lifetime of the firm, depending on the record type. These are the requirements to know for the exam. 3 years These records typically relate to customer communications and employee records. The documents that must be kept on file for at least 3 years include:

Employee records

Form U-4

Form U-5

Fingerprint records

Trade confirmations

Statements

Public communications

Correspondence

Retail communications

Institutional communications

Trial balances*

*Trial balances list the broker-dealer’s debits and credits (money out and money in). Here’s an example. For exam purposes, the key point is that trial balances must be retained for 3 years. 4 years There’s only one item with a 4-year retention requirement: customer complaints. Complaints can be tricky because the retention period depends on which regulator the question is asking about:

FINRA (or general questions): 4 years

MSRB-related questions: 6 years

Here are examples of how this shows up on exams:

According to FINRA rules, how long must broker-dealers maintain complaints on file?

Answer: 4 years

You could also see this:

According to MSRB rules, how long must broker-dealers maintain complaints on file?

Answer: 6 years

The timeframes differ by regulator, and that difference is testable. 5 years A few documents require a 5-year retention period, and they all relate to anti-money laundering (AML):

Currency transaction reports (CTRs)

Suspicious activity reports (SARs)

Customer identification program (CIP) information

6 years Most documents with a 6-year retention period relate to customer or trade records:

Customer account records

New account forms

Customer agreements, (like the margin agreement)

Trading authorization forms

Customer complaints (MSRB)

Blotters*

*Blotters are internal trading records that track the securities the broker-dealer bought and sold on a given day. For exam purposes, the key point is that blotters must be retained for 6 years.

Lifetime Some documents must be kept for the lifetime of the firm. These records relate to the firm’s structure and ongoing operations.

Stock certificates

Partnership agreements

Articles of incorporation

Meeting minutes

Many people use the acronym SPAM to remember these. (Think of Spam, the meat - often joked about as lasting forever.)

Summary

Here’s a chart summarizing the information above:

Timeframe

Documents

3 years

Employee records

Trade confirmations

Customer statements

Public communications

4 years

Complaints (FINRA)

5 years

CTRs

SARs

CIP information

6 years

Blotters

Customer account records

Complaints (MSRB)

Lifetime

Stock certificates

Partnership agreements

Articles of incorporation

Meeting minutes

Regardless of the retention periods above, any record created within the previous 2 years must be readily available. If FINRA requests recently created documents, they expect the broker-dealer to produce them quickly.