FINRA Unveils Template for New Account Applications

On October 21, 2008, FINRA issued an Information Notice announcing its distribution of a model new account application template for brokerage firms as a resource for firms designing or updating their form.  The template is written in plain English, seeks the information firms need to comply with the USA PATRIOT Act and other regulatory requirements, as well as seeking suitability information in a "plain English" manner.  FINRA also states that it highlights key disclosures for investors, as well as incorporates certain related investor education material into the document.  Say goodbye to the term "investment objective" and hello to the concept of "I plan to use this account for..."   The template appears to be well put together, seeks to obtain the necessary information, and very investor friendly.  It is also customizable for firms that conduct business in different ways and offer different products.  Its important to note that use of this template is optional, and is not required.  Though not required, firms may wish to review their forms and compare them to this, to see if they are seeking the appropriate amount of information from their clients in an understandable manner, as having the information can only assist supervisors and compliance folks in carrying out their supervisory and compliance responsibilities.