Final answer:
Broker-dealers are required by law to keep records of new account forms as part of their regulatory obligations, which include verifying customer identity and keeping detailed customer account information. These records help in complying with anti-money laundering rules and are subject to review by regulatory bodies like the SEC and FINRA. They must be maintained for several years even after an account is closed.
Step-by-step explanation:
Yes, broker-dealers are required by regulations to maintain a record of new account forms. These critical records serve various purposes including compliance with the anti-money laundering (AML) rules, ensuring appropriate customer identification, and maintaining accurate account information. When a new account is opened, a broker-dealermust obtain and verify the identity of the individuals who are opening the account, which will be documented in the new account form. Furthermore, these forms typically include essential information such as the client's investment objectives, financial status, employment information, and risk tolerance.
The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) set forth rules and regulations that require broker-dealers to keep these records for a period of time, which may extend for several years after the closure of an account. This is to ensure that there is sufficient documentation to review the conduct of the business, to address any disputes that may arise, and to facilitate regulatory inspections and audits. Therefore, maintaining accurate and up-to-date new account forms is a critical responsibility for broker-dealers to be compliant with regulatory requirements.