Seeks Business for the Broker-Dealer

This is the smallest Series 7 slice (about 9%). It is about opening the relationship the right way.

Opening an account

Before the first trade, the firm needs a new-account form: name, address, date of birth, Social Security or tax ID, employment, and whether the person is a control person at a public company. A principal must accept the account.

Account types

• Cash account: pay in full.
• Margin account: borrow from the firm; extra agreements and a $2,000 FINRA minimum equity to open.
• Joint accounts: JTWROS (survivors take the whole account) vs tenants in common (each person has a share that can go to an estate).
• Custodial (UGMA/UTMA): an adult holds assets for a minor.
• Discretionary: the representative may choose security, size, and/or timing; the form must say so and a principal must approve.

Referrals and networking

You may pay another broker-dealer for a referral if the arrangement is disclosed and allowed. You may not pay an unregistered person a commission for soliciting securities business. Networking with a bank or credit union needs clear signs: the product is not an FDIC deposit.

CIP and privacy

The customer identification program (CIP) is the legal "who is this person" check. Regulation S-P is the privacy rule: do not hand a customer's information to a marketer without the notices the rule requires.