Section 3: Understanding Trading, Customer Accounts and Prohibited Activities

3.2 Customer Accounts and Compliance Considerations

Practice specifically for the 3.2 Customer Accounts and Compliance Considerations section of the FINRA SIE Exam. We have 37 specialized questions in this category to help you master the material.

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Authoritative FINRA SIE Study Notes

Key Concepts & Regulatory Highlights

Account types (Cash, Margin, Discretionary), account registrations (Individual, JTWROS, TIC, UGMA/UTMA, IRAs), AML compliance (FinCEN, CTR, SAR), and Reg BI.

📜 Core Regulatory Rules & Requirements

✓Cash Account: Must pay in full; Reg T requires payment within T+3 (T+1 + 2 business days). Free-riding (selling before paying) incurs a 90-day account freeze.

✓Margin Account: Borrow up to 50% under Reg T; FINRA minimum initial equity is $2,000 (or 100% of purchase price if less than $2,000). Hypothecation and loan consent agreements.

✓Account Registrations: JTWROS (Joint Tenants with Rights of Survivorship, deceased share passes to surviving owner), TIC (Tenants in Common, deceased share passes to estate), UGMA/UTMA (one minor, one custodian; minor owns assets irrevocably).

✓Retirement Accounts: Traditional IRA (contributions tax-deductible if qualified, earnings grow tax-deferred, 10% penalty before 59.5, RMDs begin at age 73), Roth IRA (after-tax contributions, tax-free earnings growth and qualified distributions).

✓Anti-Money Laundering (AML): Stages are Placement, Layering, Integration. Currency Transaction Report (CTR) filed for cash deposits > $10,000 within 15 days. Suspicious Activity Report (SAR) filed for suspicious activity >= $5,000 within 30 days (client cannot be informed).

✓Regulation Best Interest (Reg BI): Requires broker-dealers to act in the best interest of retail customers and deliver Form CRS (Customer Relationship Summary).

💡 High-Yield Exam Watchouts

•Customer complaints in writing must be retained for 4 years under FINRA rules.
•Regulation S-P requires delivery of privacy notices at account opening and annually thereafter.

Why Study 3.2 Customer Accounts and Compliance Considerations?

The 3.2 Customer Accounts and Compliance Considerations portion of the Security Industry Essentials (SIE) exam is critical for success. Understanding these concepts is not just about passing the exam, but about building a foundation for your career in the securities industry.

Our practice questions are designed to mimic the official FINRA exam format, ensuring you're familiar with the wording and complexity you'll encounter on test day.

Sample Concepts Covered

Concept 1

Which act created the SEC and requires registration of new issues?

Concept 2

The primary purpose of SIPC is to protect investors against:

Concept 3

FINRA is a:

Concept 4

Anti-Money Laundering (AML) rules require firms to file a Suspicious Activity Report (SAR) for transactions involving at least:

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