Circumstances for Refusing, Restricting, or Closing Accounts
Chapters in this video
- 0:00 Why Riley the Rep's Tuesday goes sideways
- 1:09 Sketchy Sam, CIP refusal, and the discrimination trap
- 2:31 OFAC SDN match: block AND report
- 2:54 The $5,000 SAR threshold and no tipping off
- 3:45 Frantic Fran: free-riding vs pattern day trading
- 4:35 The $25,000 PDT minimum and 90-day cash freeze
- 5:32 Closing Colin and the 1-day, 3-day ACATS timeline
- 6:25 Rapid-fire exam recap
What this video covers
- When a firm must refuse or restrict an account for a CIP failure, and why national origin or other protected characteristics can never be the reason
- The dual obligation on an OFAC SDN match: block the account AND report to OFAC, not one or the other
- The $5,000 Suspicious Activity Report (SAR) threshold with the Financial Crimes Enforcement Network (FinCEN), and the absolute prohibition on tipping off the customer
- Free-riding in a cash account: the 90-day Regulation T freeze, prepay-only trading during the freeze, and why this is not a full account closure
- Pattern day trader (PDT) mechanics: 4 or more day trades in 5 business days, the $25,000 minimum equity at all times, and the closing-transactions-only restriction
- The 2-business-day hold on funds deposited to meet the PDT minimum
- The ACATS timeline when a firm closes an account: 1 business day for the carrying firm to validate or take exception, then 3 business days to complete the transfer
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