How often must account statements be sent to clients when they are held in custody?

How often must account statements be sent to clients when they are held in custody?

• A. Monthly
• B. Quarterly
• C. Annually
• D. Biannually

Answer: (B)

When a firm holds client accounts in custody, it is required to send account statements to clients on a quarterly basis. This regulatory requirement is designed to ensure that clients receive timely and accurate information regarding their investments and account balances. Quarterly statements provide clients with a regular update on the performance of their accounts, any transactions made, and any fees charged. This frequency helps enhance transparency and allows clients to review their accounts and query anything that appears incorrect or unexpected. In contrast, while monthly statements might seem beneficial, they are not mandated as a standard regulatory requirement. Similarly, annual or biannual statements would not provide clients with sufficient information in a timely manner to effectively manage their investments or spot issues with their accounts. Thus, quarterly statements strike an appropriate balance between regulatory compliance and client needs for timely information.

When a firm holds client accounts in custody, it is required to send account statements to clients on a quarterly basis. This regulatory requirement is designed to ensure that clients receive timely and accurate information regarding their investments and account balances.

Quarterly statements provide clients with a regular update on the performance of their accounts, any transactions made, and any fees charged. This frequency helps enhance transparency and allows clients to review their accounts and query anything that appears incorrect or unexpected.

In contrast, while monthly statements might seem beneficial, they are not mandated as a standard regulatory requirement. Similarly, annual or biannual statements would not provide clients with sufficient information in a timely manner to effectively manage their investments or spot issues with their accounts. Thus, quarterly statements strike an appropriate balance between regulatory compliance and client needs for timely information.