Help
FINRA Manual
Corporate Organization
| View Whole Section | Text only | Print Manager | Link |
 |
Versions (2 versions) |
 |
May 12 2003 - Dec 13 2009Dec 14 2009 onwards
2330. Customers' Securities or Funds
View whole section
This version is valid from May 12 2003 through Dec 13 2009.
Amendments have been announced but are not yet effective. To view other versions open the versions tab on the right.
SR-FINRA-2009-014 has been approved by the SEC. Effective December 14, 2009, NASD Rule 2330 (a), (e) and (f) will no longer be applicable. Please consult the appropriate FINRA rule.
(a) Improper Use
No member or person associated with a member shall make improper use of a customer's securities or funds.
(b) General Provisions
Every member in the conduct of its business shall adhere to the provisions of SEC Rule 15c3-3 under the Act with respect to obtaining possession and control of securities, and the maintenance of appropriate cash reserves. For the purposes of this Rule, the definitions contained in Rule 15c3-3 shall apply.
(c) Authorization to Lend
No member shall lend, either to himself or to others, securities carried for the account of any customer, which are eligible to be pledged or loaned unless such member shall first have obtained from the customer a written authorization permitting the lending of securities thus carried by such member.
(d) Segregation and Identification of Securities
No member shall hold securities carried for the account of any customer which have been fully paid for or which are excess margin securities unless such securities are segregated and identified by a method which clearly indicates the interest of such customer in those securities.
Cross Reference–
"Hypothecation of Customers' Securities" — See SEC Rules and Regulation T Tab
(e) Prohibition Against Guarantees
No member or person associated with a member shall guarantee a customer against loss in connection with any securities transaction or in any securities account of such customer.
(f) Sharing in Accounts; Extent Permissible
(1)(A) Except as provided in paragraph (f)(2) no member or person associated with a member shall share directly or indirectly in the profits or losses in any account of a customer carried by the member or any other member; provided, however, that a member or person associated with a member may share in the profits or losses in such an account if (i) such person associated with a member obtains prior written authorization from the member employing the associated person; (ii) such member or person associated with a member obtains prior written authorization from the customer; and (iii) such member or person associated with a member shares in the profits or losses in any account of such customer only in direct proportion to the financial contributions made to such account by either the member or person associated with a member.
(B) Exempt from the direct proportionate share limitation of paragraph (f)(1)(A)(iii) are accounts of the immediate family of such member or person associated with a member. For purposes of this Rule, the term "immediate family" shall include parents, mother-in-law or father-in-law, husband or wife, children or any relative to whose support the member or person associated with a member otherwise contributes directly or indirectly.
(2) Notwithstanding the prohibition of paragraph (f)(1), a member or person associated with a member that is acting as an investment adviser (whether or not registered as such) may receive compensation based on a share in profits or gains in an account if (i) such person associated with a member seeking such compensation obtains prior written authorization from the member employing the associated person; (ii) such member or person associated with a member seeking such compensation obtains prior written authorization from the customer; and (iii) all of the conditions in Rule 205-3 of the Investment Advisers Act of 1940 (as the same may be amended from time to time) are satisfied.
|
Amended by SR-NASD-2002-180 eff. May 12, 2003. Amended by SR-NASD-99-42 eff. April 21, 2001. Amended eff. Feb. 7, 1985. Selected Notices: 83-74, 86-74, 88-55, 94-93, 01-24, 03-21. |
