Upcoming Effective Date of FINRA’s Know Your Customer Rule
Back in January of 2011, FINRA announced new FINRA Rule 2090 (Know Your Customer). The effective date of the before-mentioned rule is approximately one month away on July 9, 2009. Some highlights of the new rule are provided below:
1) Requires broker-dealers and associated persons to use “reasonable diligence” to know “essential facts” in opening customer accounts regardless of whether trades are entered;
2) Applicable to all customer accounts, whether retail or institutional and obligation is ongoing;
3) Information is to be used to effectively service the customer’s account and acting on behalf of the customer;
4) Understand the authority of each person acting on behalf of the customer, i.e., names and limits on authority; and
5) Information will help broker-dealers and associated persons comply with applicable laws, regulations and rules.
If you want to know how to obtain these “essential facts” or what questions to add to your account operating documents, please contact us.
May Law, PC is a securities and commodities boutique firm that has a an extensive knowledge of FINRA related rules and assists registered broker-dealers (BDs) and associated persons (APs) in responding to FINRA investigations, disciplinary matters and routine “on the record” interviews (OTRs). The firm also assists broker-dealers draft and revise Compliance and Supervisory Manuals. The firm’s website is located at www.maylawpc.net, and the main number is 847-675-1052. Andrew May has been practicing law for 16 years and can be contacted at firstname.lastname@example.org.
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