An investment adviser representative (IAR) is approached by a former client, Mr. Davis, who was dissatisfied with the IAR's services and transferred his account to another firm a year ago. Mr. Davis now requests a copy of all correspondence, trade confirmations, and account statements from his time as a client with the IAR's firm. Under the Uniform Securities Act (USA), what is the IAR's obligation regarding this request?
- AThe IAR should instruct Mr. Davis to contact the new firm for his records.
- BThe IAR must provide only trade confirmations, as these are legally required disclosures.
- CThe IAR must provide all requested records within a reasonable timeframe, as these are client records.
- DThe IAR is not obligated to provide the records, as Mr. Davis is no longer a client.
Show answer & explanationAnswer & explanation
Correct answer: C. The IAR must provide all requested records within a reasonable timeframe, as these are client records.
Investment advisers and their representatives have an ongoing obligation to maintain client records for a specified period (typically 5 years from the last entry, with the first 2 years in an easily accessible place). These records belong to the client and must be provided upon request, even if the individual is no longer an active client, within a reasonable timeframe.
Why the other options are wrong
- A. While the new firm would have recent records, the previous firm (and IAR) is responsible for records generated during the period of their service to the client.
- B. Trade confirmations are indeed important, but the obligation extends to all records related to the client's account during the period of service.
- D. This is incorrect. The obligation to maintain and provide access to client records persists even after the client relationship ends.
Client Record Retention & Access
Investment advisers and their representatives must retain client records for a specific period (e.g., 5 years) and make them available to clients upon request, even if the client relationship has terminated.
- Records must be kept for a prescribed period.
- Clients have a right to access their records.
- Obligation continues after client relationship ends.
Memory trick: Keep It Safe, Give When Asked, Even Later.