FINRA Series 7Processes and Confirms TransactionsMedium
A customer's cash account holds a long-term mutual fund position purchased two years ago. No purchases, sales, or other transactions have occurred in the account during the past 12 months. How frequently must the broker-dealer send account statements to this customer?
- AQuarterly, since the account has a security position but no activity
- BSemiannually
- COnly when requested by the customer
- DMonthly, since a security position is maintained
Show answer & explanationAnswer & explanation
Correct answer: A. Quarterly, since the account has a security position but no activity
FINRA rules require account statements to be sent at least quarterly to any customer whose account has a security position or a money balance, even in the absence of trading activity. Monthly statements are only mandated when there has been activity during the period.
Why the other options are wrong
- B. Semiannual statements do not satisfy the minimum quarterly requirement under FINRA rules.
- C. FINRA rules impose a mandatory minimum frequency, not one dependent on customer request.
- D. Monthly statements are required only when there is account activity, not merely because a position is held.
Account Statement Frequency
FINRA requires account statements at least quarterly for accounts with any security position or money balance, and at least monthly if there has been activity in the account during the period.
- Quarterly minimum applies to inactive accounts with positions or balances
- Monthly required if trades or other activity occurred
- Applies to both cash and margin accounts
Memory trick: No trades but still holding? Quarterly is your minimum reading.