Rule 405

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Rule 405

NYSE codification of "know your customer" rules, which require that a customer's situation is suitable for any investment being made.

Rule 405

A New York Stock Exchange rule requiring investment advisers to only make or recommend investments for their clients' accounts that a "prudent person" would make. This means that investment advisers are not allowed to make investments they believe will lose money for the client. It does not require that the investment adviser always make correct decisions; it merely requires him/her to make decisions that will be generally accepted as sound for someone of average intelligence who seeks to do what is in the client's best interests as the client defines them. It is an example of a suitability rule. See also: Prudent-Person Rule.

Rule 405

The "know your customer" rule of the New York Stock Exchange that requires member firms to obtain significant facts from customers when opening new accounts. These facts are supposed to give the broker and the firm some background on the customers.
References in periodicals archive ?
Property ownership is easier to ascertain, and banks are able to enforce the "know your customer rules".
He acknowledged the importance of the Know Your Customer Rules, but said it was just as important that Bahamians be able to go to a bank and open an account with little hassle, once they have the proper identification.
In addition to many of the regulations faced by online lenders, like the Gramm-Leach-Bliley and Bank Secrecy acts and anti-money laundering regulations, payments processors must also comply with "know your customer rules," Customer Identification Program requirements under the USA PATRIOT Act, state money transmitter and escheatment laws, operating and data security rules for credit card networks, the Unlawful Internet Gambling Enforcement Act and the Consumer Financial Protection Bureau's "Nine Consumer Protection Principles."
While financial crime and know your customer rules are Mimiros near-term focus, the company is building a comprehensive global repository that provides an instant, accurate risk profile for every commercial entity and individual in the world.