How Long Must a FINRA Firm Maintain a Complaint File?

The Financial Industry Regulatory Authority (FINRA) oversees broker-dealers and safeguards the integrity of the securities industry. Comprehensive recordkeeping is important for maintaining transparency, facilitating regulatory examinations, and for protecting investors. Accurate and accessible records enable regulators to monitor compliance and investigate potential misconduct.

Defining a Retainable Complaint

FINRA defines a “customer complaint” as any written grievance from a customer or someone authorized to act on their behalf. This includes complaints related to firm or associated person activities concerning transactions, securities, or funds. The definition covers various communication forms, such as letters, emails, text messages, and social media messages.

While verbal complaints are not formally included, firms should address them, as unresolved grievances can escalate into written complaints. Reportable complaints often involve allegations of misconduct, such as unauthorized trading, fraud, misrepresentation, unsuitable recommendations, or misappropriation of funds or securities. Complaints alleging theft, misappropriation, or forgery must be reported to FINRA within 30 days of receipt.

Complaint Retention Period

FINRA Rule 4513 specifies that member firms must preserve records of written customer complaints. These complaint records are required to be kept for at least four years. This retention period is distinct from the general six-year retention period that applies to many other books and records under FINRA Rule 4511. The four-year retention period for complaints begins from the date the complaint is received by the member firm.

Firms must ensure that these complaint records, along with any actions taken by the member, are readily available for examination. This duration allows regulators to review historical complaint trends and specific instances over time. While the FINRA rule sets a minimum of four years, firms may choose to retain records for longer periods based on their internal policies or other applicable regulations.

Complaint Recordkeeping Requirements

FINRA imposes specific requirements for maintaining complaint records to ensure their accuracy and accessibility. Firms must preserve these records in a format and media compliant with SEC Rule 17a-4, which mandates that records be stored in a non-rewritable, non-erasable format. This ensures the integrity of the records, preventing alteration or deletion once they are created. Records can be kept on paper, micrographic materials, or electronically.

Electronic recordkeeping systems must meet specific criteria, including maintaining an audit system to differentiate between original and duplicate records, and providing clear communication about electronic storage methods. All records, regardless of format, must be readily accessible for examination by FINRA upon request. This includes the ability to promptly retrieve records, particularly those created within the last two years, which are expected to be kept in an easily accessible location. Maintaining an organized system for complaint files, accompanied by statements of their resolution and endorsement by a principal, is important for demonstrating compliance and facilitating regulatory reviews.