This regulation requires the broker to maintain, in columnar form, a separate record of trust funds for each beneficiary or transaction accounting for all funds which have been deposited into a trust account. This record identifies which beneficiary has funds in the trust account. This record must indicate the following in chronological order and in columnar form:
- date of deposit,
- amount of deposit,
- name of payee or payor,
- check number,
- date and amount, and
- running balance of the separate record after each transaction on any date.
This regulation is cited mostly due to one or more of the following reasons:
- The broker did not maintain separate records for each beneficiary.
- Separate records were maintained, but the broker was cited because information was missing.
- Separate records were maintained, but the broker was cited because the items posted were not accurate, e.g., when posting a check, it was the wrong amount; or, for a deposit, “the amount” was wrong and/or “the date of deposit” was the wrong date.
- Separate records were maintained, but a daily running balance for each record was not maintained or it was not accurate. Brokers must always keep a daily balance for each separate record.
It should be noted that records maintained under an automated data processing system in accordance with generally accepted accounting principles should be in compliance as long as they contain the elements previously noted.