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Rule 407 Transactions — Employees of Member Organizations and the Exchange

SR-FINRA-2015-029 has been approved by the SEC. Effective April 3, 2017, this rule will no longer be applicable. Please consult the appropriate FINRA rule.

/01 Account of Spouse

When a situation arises where the spouse of an allied member or employee associated with a member organization subject to Rule 407 wishes to open an account with another registered broker-dealer, the following interpretation applies.

If it has been proven to the satisfaction of the member organization that the spouse's account is completely independent of the individual subject to Rule 407, approval of the account is not required and neither the member organization carrying the spouse's account nor the employee is required to provide confirmations and statements to the member organization employer.
/02 Majority Stock Ownership

When an employee associated with a member organization is also a majority stockholder of a non-public corporation that wishes to open a discretionary margin account at another member organization, Rule 407(b) applies.

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