Account Statements
Account statements provide customers with periodic summaries of their holdings, activity, and account value. FINRA Rule 2231 establishes the minimum requirements for customer account statements.
FINRA Rule 2231 Requirements
Minimum Frequency
| Situation | Required Frequency |
|---|---|
| Standard accounts | At least quarterly |
| Penny stock holdings | Monthly |
| No positions or activity | Quarterly (if any balance in year) |
Industry Practice: Most firms send statements monthly, even though quarterly is the minimum requirement.
When Statements Must Be Sent
Statements must be sent to each customer whose account had:
- A security position, OR
- A money balance, OR
- Account activity
...during the period since the last statement.
Required Statement Information
Position Information
| Information | Description |
|---|---|
| Security name | Full description of holdings |
| Quantity | Number of shares/units owned |
| Market value | Current value of positions |
| Cost basis | Original purchase price (if available) |
| Unrealized gain/loss | Paper profit or loss |
Account Activity
| Activity Type | Information Shown |
|---|---|
| Purchases | Date, security, quantity, price |
| Sales | Date, security, quantity, price, gain/loss |
| Dividends | Amount received, reinvestment |
| Interest | Amount credited |
| Fees | Management fees, charges |
| Deposits/Withdrawals | Cash movements |
Summary Information
- Beginning balance for the period
- Ending balance for the period
- Total deposits and withdrawals
- Total fees and charges
- Year-to-date activity summary
Customer Notification Requirement
FINRA Rule 2231 requires statements to include:
Mandatory Notice: A statement advising the customer to report promptly any inaccuracy or discrepancy in their account to their brokerage firm.
DVP/RVP Account Exception
Quarterly statements are NOT required if ALL of the following are true:
| Condition | Requirement |
|---|---|
| 1 | Account is carried solely for DVP/RVP execution |
| 2 | All transactions are DVP/RVP |
| 3 | No security or money positions at quarter-end |
| 4 | Customer consents in writing |
DVP = Delivery Versus Payment RVP = Receipt Versus Payment
Electronic Delivery
Firms can deliver statements electronically if:
| Requirement | Description |
|---|---|
| Customer consent | Must agree to electronic delivery |
| Access | Customer must be able to access documents |
| Retention | Customer must be able to retain copies |
| Revocation | Customer can revoke consent |
| SEC standards | Must comply with SEC electronic delivery rules |
Customer Review Responsibilities
What Customers Should Verify
| Item | Check For |
|---|---|
| Positions | All securities owned are listed correctly |
| Quantities | Share/unit counts are accurate |
| Values | Market values are reasonable |
| Activity | All transactions were authorized |
| Cash | Deposits and withdrawals are correct |
| Fees | Charges are as expected |
Reporting Discrepancies
If errors are found:
- Contact the firm immediately
- Document concerns in writing
- Keep copies of statements
- Follow up until resolved
Importance: Failure to report errors may be interpreted as acceptance of account activity, potentially affecting dispute resolution.
Statement vs. Confirmation
| Feature | Trade Confirmation | Account Statement |
|---|---|---|
| Frequency | Per transaction | Periodic (quarterly/monthly) |
| Detail | Single transaction | All account activity |
| Timing | At or before settlement | End of period |
| Purpose | Verify specific trade | Review overall account |
Mutual Fund Statements
Mutual fund companies send their own statements:
- Typically quarterly or monthly
- Show share position and value
- Transaction history
- Distribution information
- May be separate from brokerage statement
Variable Annuity Statements
Insurance companies send contract statements:
- Typically quarterly or annually
- Contract value
- Subaccount allocations
- Surrender value
- Death benefit value
- Fee disclosure
Retention of Statements
Customers should retain statements for:
- Tax purposes - Cost basis, gain/loss records
- Dispute resolution - Evidence of account history
- Financial planning - Track progress toward goals
- Estate planning - Documentation of assets
Key Exam Points
- Quarterly minimum - Standard accounts require quarterly statements
- Monthly for penny stocks - More frequent requirement
- Discrepancy notice required - Must advise customers to report errors
- Electronic delivery - Requires customer consent
- DVP/RVP exception - Can waive statements with written consent
- Review promptly - Customers should verify accuracy
- Document in writing - Report errors in writing to protect rights
Under FINRA Rule 2231, what is the minimum frequency for sending account statements to customers?
Which statement must be included on every customer account statement according to FINRA rules?
Under what circumstances can a firm deliver account statements electronically?
6.5 Recordkeeping Requirements
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