Why Do BBAE, Fierce, and Tastytrade Need SSN?
If you are opening a brokerage account with Tastytrade, BBAE, or the Fierce App, you’ve probably noticed that they ask for your SSN to complete the application. You might be wondering why they need this information. The fact is, all U.S. brokerages are legally required to collect your SSN along with other personal information. This article explains why this requirement exists.
All Brokers Are Required to Record Your SSN
All U.S. brokers, including Tastytrade, must ask for your SSN before approving your account. This is mainly because it’s a legal requirement from the federal government, but it’s also recommended as a best practice by leading self-regulatory organizations like FINRA.
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Record-Keeping Requirements
The Securities and Exchange Commission (SEC) is the federal agency that enforces securities laws and requires brokers to record your SSN. This allows the government to access the account records that Tastytrade and other brokers maintain, helping to fight money laundering and other illegal financial activities. By tying each account to a valid SSN, it becomes harder for individuals with illicitly-earned money to move it through the financial system without leaving a trail.
Customer Identification Rule
In 2003, the SEC and the U.S. Treasury Department implemented the customer identification rule to force banks, brokers, and other financial institutions to “know their customer.” Before this rule, there wasn’t much incentive for banks to prevent suspicious accounts because every new account meant more revenue, even if the money was laundered. This rule makes it clear that brokerages and banks must legally collect their clients' personal details.
By doing so, they make it easier for the government to crack down on money laundering and other illicit financial activities. The government can use the personal details collected by banks and brokers to compare against their list of known and suspected terrorists. If illegal activity is found, the identities of the account holders involved will be clear. Tastytrade could face fines or other penalties if they violate this rule.
Personal Information to Determine Investment Suitability
When filling out Tastytrade’s new account application, you might notice questions about your investing experience and goals. Besides helping Tastytrade identify its customers, these personal details help them understand and serve their customers better. Your answers help the broker know which investment types are suitable for you and what kind of trading activity to expect in your account. This helps Tastytrade monitor your account for suspicious activity and recommend new features or investments that might fit your needs.
Why Tastytrade Asks for SSN Recap
In short, if you are opening a brokerage account with Tastytrade (or any U.S. broker), you must be prepared to provide your SSN, or they will not approve your application. This request is standard procedure and a legal requirement from the federal government.
Updated on 7/4/2024.
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