Supervision of Customer Accounts
The account file is the supervisory record
Every new account must capture what a registered representative needs to make a recommendation - investment objective, financial situation, tax status, age, liquidity needs, risk tolerance - and the principal approving the account must actually see it. Under Regulation Best Interest, the care obligation requires the firm to understand the product and the customer and to reasonably conclude the recommendation is in the retail customer's best interest; the conflict-of-interest obligation means compensation cannot drive the recommendation.
Discretion, margin, and options
Discretion over the choice of security, the amount, or whether to buy or sell requires prior written customer authorization and written acceptance by a principal; the account then needs heightened supervision, and order tickets must carry the discretionary designation. Discretion limited to time and price does not require written authorization but the orders are still reviewed. Third-party trading authority must be written and approved. Margin accounts require a margin agreement and the Regulation T initial requirement, with FINRA Rule 4210 setting maintenance levels. Options accounts require separate approval based on experience and financial resources, and the approval level dictates which strategies may be used.
Senior investors and identity
A trusted contact person must be requested under FINRA Rule 4512, and Rule 2165 permits a temporary hold on disbursements when exploitation is reasonably suspected, with documentation and internal reporting. A sudden address change followed by a wire request is a classic identity-theft red flag under Regulation S-ID.
Rule of thumb
If a question asks whether a representative may act, the answer usually turns on paperwork already in the file - written authorization plus principal approval - not on good intentions.