7.2 Statements, Electronic Delivery and Nontrade Notices

Electronic Confirmation & Statement Delivery Standards

The SEC allows broker-dealers to deliver trade confirmations, prospectuses, and account statements electronically rather than via physical postal mail, provided the firm satisfies the SEC's Electronic Delivery Framework established across landmark interpretive releases:

1. Informed Consent: The broker-dealer must obtain affirmative, informed consent from the customer prior to initiating electronic delivery. Consent and other evidence must satisfy the applicable SEC electronic-delivery framework. Explain access requirements and paper alternatives; do not assume a general promise that every paper service is free.
2. Notice: Customers must receive timely, proactive notification whenever a new document is available. Delivering a confirmation solely by uploading it silently to a portal is impermissible; the firm must send an email alert or push notification informing the customer of the document's availability.
3. Access: The customer must have continuous, effective access to the document. Electronic access must be equivalent to postal mail—meaning the document must be easily viewable, downloadable, printable, and archived for historical retrieval.
4. Evidence of Delivery: Broker-dealers must retain auditable evidence proving delivery was completed. This includes electronic delivery receipts, email bounce-back monitoring, or secure portal audit logs documenting client access. If an email notification bounces back as undeliverable, the firm must follow up and deliver a physical paper confirmation via postal mail.
5. Data Confidentiality & Cybersecurity: The delivery mechanism must ensure customer non-public personal information (NPI) remains encrypted and secured against unauthorized access under Regulation S-P.

Customer Statements and Performance Reports

FINRA Rule 2231 generally requires statements at least once each calendar quarter when there has been a security position, money balance or account activity since the prior statement. The rule does not universally require a monthly statement whenever any activity occurs. Monthly delivery may be a firm practice or arise under other applicable rules, such as options-account requirements.

Statements describe positions, balances and activity. They must advise customers to report inaccuracies promptly and reconfirm oral reports in writing. Where both introducing and carrying firms service the account, the advisory refers customers to both firms. Apply SIPC-information and other disclosure requirements from their actual sources; do not invent a universal sentence certifying every position’s segregation on every statement.

A qualifying execution-only DVP/RVP account may receive an exception from quarterly statements only when all conditions are satisfied, including written customer consent and the absence of non-temporary quarter-end positions. It is not a blanket exemption for wealthy customers.

A performance report estimates returns using an identified methodology and may include held-away assets. It does not replace the carrying firm’s account statement or establish custody. Check valuation dates, cash-flow treatment, fees, estimated prices and any noncustodied assets. An illiquid security’s estimated value is not a guaranteed liquidation price.

For a $100,000 opening account with a $20,000 deposit and $125,000 ending balance, the $25,000 change is not a 25% investment return: $20,000 came from the customer. A proper return calculation considers timing and methodology. Operations should flag misleading performance presentations rather than copy them onto a statement as a “verified” market value.

Holding Customer Mail (FINRA Rule 3150)

Occasionally, a customer requests that a broker-dealer refrain from mailing confirmations and monthly account statements (for example, while traveling overseas or during an extended relocation). Because holding mail deprives the investor of independent oversight of account activity, FINRA enforces rigid procedural restrictions.

General Prohibition & Operational Safeguards

A broker-dealer is strictly prohibited from holding customer mail without specific, written authorization. Firms cannot hold mail based on verbal requests, registered representative recommendations, or internal administrative convenience.

Mandatory Requirements for Permissible Hold-Mail Requests

Under FINRA Rule 3150:

1. Written Instructions: The customer must provide written instructions requesting the firm to hold mail.
2. Specific Timeframe: The written request must specify the exact beginning and ending dates of the hold period.
3. Valid, Documented Reason:
   • Written instructions specify the time period; apply the rule and firm controls even for short holds.
   • For hold periods exceeding 3 months, the customer must demonstrate a valid, documented reason (e.g., safety or security concerns, overseas military deployment, extended medical sabbatical). Crucially, a hold exceeding 3 months cannot be granted merely for the customer's convenience.
4. Written Supervisory Procedures (WSPs): The broker-dealer must:
   • Advise the customer in writing of alternate methods to view account information (e.g., secure internet portal access);
   • Obtain repeated written confirmation from the customer if the hold exceeds original expectations;
   • Verify periodically that the customer's hold instructions still apply; and
   • Ensure the customer's mail is not tampered with, held mail is securely archived, and regular account monitoring continues uninterrupted.

Nontrade Notices and Prospectus Delivery

A cash or securities movement can require notice even without a market trade. Under Rule 3110’s supervisory provisions, firms maintain procedures for customer transmittals to third parties, outside entities, locations other than the primary residence, or representatives, including customer notice/confirmation/follow-up as applicable. An internal ledger entry is not a substitute for independently verifying a high-risk transfer.

Check prospectus delivery separately from the trade receipt. An investment-company purchase may use a permitted summary prospectus with access to required materials; applicable delivery and access conditions must be met. Options have the ODD and approval process. Do not call a confirmation a prospectus or assume posting a file silently satisfies all delivery duties.

If a representative asks staff to withhold a confirmation because it reveals an unauthorized trade, preserve the record and escalate. A customer’s permitted hold-mail request is not permission to falsify or permanently suppress the document. Investigate returned electronic alerts and failed paper delivery under approved procedures.

Reconcile pricing feeds, corporate actions and statement generation. A stale estimate should be identified and corrected through a documented process. Never raise a displayed value to conceal an investment loss, fabricate an accrued dividend or omit a debit to make an account appear solvent.

Sources checked 2026-10-20: FINRA statements, IRS Publication 550, IRS Form 1099-B instructions.