When investors contact brokers, they are often surprised by the number of requests for personal information. The broker is just complying with the law and rules set forth by the Securities Exchange Commission (SEC).

Indeed, certain required information must be obtained before a broker can make any trades on behalf of a client. These include your Social Security number or tax ID, your contact information, and whether or not you are an insider at any publicly traded corporation.

SSN Requirements for Trading Stocks

Broker-dealers in the U.S. are required to record a 澳洲幸运5官方开奖结果体彩网:tax identification number (TIN) for their clients, and this number is usually a 澳洲幸运5官方开奖结果体彩网:Social Security number (SSN). However, there are several other ways for non-U.S. citizens to supply a TIN. In many cases, a valid passport number, an alien registration card number, and other government-issued ID numbers (such as a driver's license number) can be used.

Personal Information

Brokers don't ask investors for their personal information to make conversation. There's a perfectly good reason behind it—they have to ask. The type of information required of a broker is spelled out in Rule 17a-3(a)(17) of the 澳洲幸运5官方开奖结果体彩网:Securities Exchange Act of 1934.

The rule specifically requires the customer's name, SSN/TIN, mailing address, telephone number, date of birth, employment status (including occupation and whether the customer is an 澳洲幸运5官方开奖结果体彩网:associated person of an exchange, a broker, or a dealer), annual income, net worth (excluding the value of a primary residence), and investment objectives.

Tax compliance is one reason that brokers need personal information. Investors need to report capital gains, losses, and dividends to the IRS. And brokers must have this data in order to send the required forms each year.

The SEC lists three other reasons why brokers are required to ask for personal information. They are 澳洲幸运5官方开奖结果体彩网:suitability, record-keeping requirements, and anti-terrorist/澳洲幸运5官方开奖结果体彩网:anti-money laundering (AML) laws.

Suitability

Suitability refers to how an investor's financial situation matches the advice and recommendations of a broker. A broker must attempt to understand an investor's circumstances and preferences. The broker should then provide recommendations that are suitable for that person and their investment objectives. A broker who does not do that violates rules laid out by the 澳洲幸运5官方开奖结果体彩网🐼:National Association of Securities Deal🦹ers.

Relevant information includes an individual's 澳洲幸运5官方开奖结果体彩网:risk tolerance, financial goals, debts, number of years to retirement, and 澳洲幸运5官方开奖结果体彩网:net worth. A good broker will tailor advice to p🎐articular situations. If a broker advises you to take any action that directly contradicts with your financial goals and circumstances, you might even have grounds for legal action.

Record-Keeping

The SEC requires brokers to maintain a current record of personal information. Note that if a client refuses to provide this data, the broker is excused from following the rule. However, the broker must be able to prove that an effort was made to obtain and document the information.

Keep in mind that some personal information may change over time and that it's the investor's responsibility to volunteer such new information to update the record. A broker may also ask for updates on an annual basis, or periodically send the information it has on file to customers so that they can verify whether it is still accurate. Address changes may be of particular importance because the investor will receive a 澳洲幸运5官方开奖结果体彩网:prospectus and other information for each investment.

Terrorism and Money Laundering

🌸Finally, the broker must provide client information to meet anti-money laundering and anti-terrorist financing requirements. The minimum requirements for this section include:

• Name
• Address (home or business address, not a P.O. Box)
• TIN, such as an SSN
• Date of birth (for a person)

This information allows the broker to verify the client's identity. The client's personal data is cross-checked against lists of known or suspected terrorists.

These requirements can create issues for misidentified individuals and victims of identity theft. An identity check in such a case may reveal that an identity has be💫en stolen and is being abused for money laundering purposes.

Before reaching out to a broker, it is a good idea to review credit reports for signs of unusual🔯 activity. One of the best credit monitoring services would likely be useful in this endeavor. There are also services that monitor Social Sec🐭urity numbers to spot potential theft.

Additional Information

The 澳洲幸运5官方开奖结果体彩网:Financial Industry ꧙Regulatory Authority (FINRA) has ✅a list of other personal information a broker may ask when opening an ༒account. Though not required, it suggests that investors pass these details on so the firm can better serve their trading and investment needs:

• Contact person: They may ask for the name, address, and telephone number of a trusted contact person. FINRA states that this is not a requirement. This information is only needed if the broker is authorized to disclose information in the event of financial exploitation.
• Type of account: The broker may ask investors if they want to open cash accounts or 澳洲幸运5官方开奖结果体彩网:margin accounts. In a cash account, investors are required to pay for their trades with cash deposits. Margin accounts are needed for using most types of leverage and trading 澳洲幸运5官方开奖结果体彩网:derivatives.
• Uninvested cash: Investors may also be asked how they intend to deal with cash on hand in their accounts. That includes any money they deposit at regular intervals, dividends, or interest on investments. 澳洲幸运5官方开奖结果体彩网:Automatic reinvestment plans usually boost returns in the long run.

Online Brokerages and Trading Platforms

Some brokerages have traditional offices, which means that investors are able to supply confidential information in person. Transferring data in person can reduce the risk of 澳洲幸运5官方开奖结果体彩网:identity theft. When trading online, investors are often required to give up personal information through the trading platform or app. 澳洲幸运5官方开奖结果体彩网:Due diligence is crucial.

Just as with any traditional broker, investors need to know who is getting their information. Read up on the brokerage's background and check out reviews to see if it is legitimate. Beware of fake apps and online platforms designed to harvest personal information. Legitimate apps will usually have a large number of users and reviews. 

The Bottom Line

Don’t be alarme🐷d if your broker starts asking for personal information. They are required by law to ask for certain things, including your name, Social Security and telephone number, date of birth, employment status, and annual income. Normally, getting asked these types of questions is perfectly acceptable.

There are a number of reasons why this kind of information is required. Some are needed to comply with 澳洲幸运5官方开奖结果体彩网:record keeping and anti-terrorist procedures. Others are collected for tax purposes and to make sure you get ꦇrecommended the right financial products.

You’re better off providing what is asked of you. However, if you have any doubts ask, and when sharing confidential information online be extra careful.