What should a broker-dealer do if a new account application is incomplete?

In the context of broker-dealer practices, when a new account application is incomplete, the appropriate action is to delay the account approval until all necessary information is obtained. This approach ensures compliance with regulatory requirements and protects both the firm and the client.

Regulatory bodies, like FINRA, have established guidelines that require broker-dealers to obtain specific information before processing transactions. If the application lacks crucial details, such as the client's financial background, investment objectives, or risk tolerance, approving the account could expose the firm to potential liabilities or regulatory scrutiny.

By postponing the account approval, the broker-dealer ensures that all pertinent information is collected, which helps in conducting proper due diligence and assessing whether the products and services being offered are suitable for the client. Ultimately, this fosters a responsible and client-centric approach to investment management, safeguarding both the broker-dealer's interests and those of the client.