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Because I'm a broker and know my clients goals and there risk tolerance to
achieve those goals. This is a personal relationship that is formed over a
period of time. I have clients that take responsibility for their own
actions and I have total trust in them. If for example they were to call me
up and make a large purchase of a volatile stock and had no money in their
account I would buy the stock knowing they would deposit the funds later.
Keep in mind if they didn't I would have to sell out the position and
absorb the loss if any personally. If it turned out to be a profit I
couldn't keep it. Knowing this I wouldn't do the same for other clients I
have although they may have a larger net worth and maybe more experience.
This type relationship (know your customer rule)couldn't exist if I had a
high number of continuing new accounts being opened minus personal contact.
Your a lawyer you guys write these new account documents requirements for
firms these customers sign to open and trade their accounts. If by chance a
customer falls short on net worth or experience then additional forms are
needed to open the account. All a firm has is that information given them
and a history of that individual previous stock accounts but only if it's
bad history. A firm doesn't care if your telling the truth about yourself
only that you said it about yourself and it's in writing. Like I said your
a lawyer and lawyers write these new account opening documents to protect
the firm from liability. New account forms are not written to protect the
customer. If your a level 1 option guy and desire to be a level 2 guy
before you place your first trade no problem. Just sign an additional form
saying you lack experience but still want to do this, its done. The firm
has your money prior to the trade controls the margin requirements and has
all the needed documentation so their butts are covered.
Robert
At 10:04 PM 7/17/1999 -0400, Robyn Greene wrote:
>Robert W Cummings wrote:
>
>> Know your customer rule becomes impossible using
>> the Internet for these firms given the amount of new accounts opened daily
>> on-line.
>
>Why? When I opened an account with ETrade - the account application (for
general
>trading and level I and II options trading) was just about the same I had to
>complete to open other "offline" brokerage accounts. Plus - the account
>application had to be signed and mailed - not simply emailed back to the
company.
>And then I had to wait for the account application to be approved before I
could
>do anything.
>
>Perhaps what you're saying is that there are some online firms around that
are too
>sloppy to follow standard practices when it comes to opening accounts. Robyn
>
>
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