Customer Communications & Reporting Requirements

Types of Communications

• Retail Communication (formerly "advertising")
• Any written/electronic communication to 25+ retail investors within 30 days
• Must be approved by a principal BEFORE first use (pre-approval)
• Must be filed with FINRA within 10 business days of first use
• New member firms: must pre-file with FINRA for first year

• Institutional Communication
• Communication to institutional investors only
• Does NOT require pre-approval (but must have supervisory procedures)
• Must be reviewed by principal (but can be after use)
• Institutional = entities with 50M+ in assets, registered investment advisers, B/Ds

• Correspondence
• Written communication to 25 or fewer retail investors within 30 days
• Does NOT require pre-approval
• Must be subject to firm supervision/review procedures

Reporting Thresholds

• SAR (Suspicious Activity Report)
• $5,000+ in suspicious activity through an account
• $2,000+ if involving an employee
• Filed with FinCEN (not the customer — do NOT notify the customer!)
• Must file within 30 days of detection

• CTR (Currency Transaction Report)
• Cash transactions exceeding $10,000 in a single day
• STRUCTURING: deliberately breaking up transactions to avoid reporting = ILLEGAL
• Filed with FinCEN

• Large Trader Reporting (Rule 13H)
• 2 million shares or $20 million in a single day
• OR 20 million shares or $200 million in a calendar month
• Must file Form 13H with the SEC

Customer Complaints

• Written complaints must be kept for 4 YEARS
• Must be reported to FINRA
• Electronic complaints (email) count as written
• Must have procedures for handling complaints

Books & Records

• Trade blotters, customer account records, communications: 6 YEARS (first 2 in easily accessible location)
• Customer complaints: 4 YEARS
• Partnership articles: 3 YEARS after dissolution
• Firms must maintain and preserve in compliance with SEC Rule 17a-4