Key Takeaways
- Background checks must be completed before hiring for options positions.
- Prior disciplinary history requires enhanced due diligence.
- Onboarding must include options-specific training.
- Heightened supervision may be required for certain new hires.
- Documentation of hiring decisions is required.
Last updated: January 2026
Hiring and Onboarding
Proper hiring and onboarding procedures are essential to ensure that only qualified, suitable individuals engage in options activities.
Pre-Hire Due Diligence
Background Check Requirements
| Check | Source |
|---|---|
| CRD/BrokerCheck | FINRA registration and disclosure history |
| Criminal background | FBI fingerprint check |
| Credit check | Financial responsibility (if applicable) |
| Employment verification | Prior employer confirmation |
| Reference checks | Professional references |
Red Flags to Investigate
| Red Flag | Concern |
|---|---|
| Disclosure events | Past violations or complaints |
| Termination for cause | Prior problems at other firms |
| Gaps in employment | Unexplained periods |
| Regulatory sanctions | Bars, suspensions, fines |
| Customer complaints | Pattern of complaints |
Heightened Supervision Candidates
When Heightened Supervision is Required
| Situation | Reason |
|---|---|
| Disclosure history | Past regulatory or customer issues |
| Inexperienced | Limited options experience |
| Prior firm issues | Problems at previous employer |
| Special conditions | Regulatory conditions on registration |
Heightened Supervision Elements
| Element | Description |
|---|---|
| Closer monitoring | More frequent review of activity |
| Pre-approval | Trades may require supervisor approval |
| Contact monitoring | Customer communications reviewed |
| Regular meetings | Scheduled check-ins with supervisor |
Onboarding Procedures
Required Training
| Training Area | Content |
|---|---|
| Firm procedures | WSPs, compliance policies |
| Options rules | FINRA, OCC, exchange rules |
| Suitability | Options suitability requirements |
| Documentation | Account and order documentation |
| Supervision | Understanding supervisory structure |
Options-Specific Training
| Topic | Coverage |
|---|---|
| Options products | Types of options, strategies |
| Account opening | Options account requirements |
| ODD delivery | When and how to deliver |
| Margin | Options margin requirements |
| Risk disclosure | Communicating risks to customers |
Documentation Requirements
Hiring Documentation
| Document | Purpose |
|---|---|
| Application | Record of candidate information |
| Background checks | Results of all checks performed |
| Reference notes | Summary of reference conversations |
| Hiring decision | Rationale for hiring/not hiring |
| Supervision plan | If heightened supervision required |
Retention Requirements
| Document | Retention Period |
|---|---|
| U4 and amendments | 3 years after termination |
| Background checks | Per firm policy (minimum 3 years) |
| Training records | 3 years |
Test Your Knowledge
A new hire with a history of customer complaints at a prior firm should:
A
B
C
D
Test Your Knowledge
Options-specific training for new hires should include all of the following EXCEPT:
A
B
C
D