Section 260.241.6 - Quarterly Security Counts(a) Every licensed broker-dealer, except such broker-dealers operating subject to all limitations provided in paragraph (a)(2) of Rule 15c3-1 under the Securities Exchange Act of 1934 (17 CFR 240.15c3-1) shall, at least once in each calendar quarter-year: (1) physically examine and count all securities held;(2) account for all securities in transfer, in transit, pledged, loaned, borrowed, deposited, failed to receive and failed to deliver or otherwise subject to such person's control or direction but not in his physical possession by examination and comparison of the supporting detail records with the appropriate ledger control accounts;(3) verify all securities in transfer, in transit, pledged, loaned, borrowed, deposited, failed to receive and failed to deliver or otherwise subject to such person's control or direction but not in such person's physical possession, where such securities have been in said status for longer than thirty days;(4) compare the results of the count and verification with such person's records; and(5) record on the books and records of the broker-dealer all unresolved differences setting forth the security involved and the date of comparison in a security count difference account no later than seven business days after the date of each such security examination, count, and verification in accordance with the requirements provided in (b) hereof; provided, however, that such procedures need not be carried out by the broker-dealer for the calendar quarter-year during which the date of such person's annual report of financial condition pursuant to Section 260.241.2(a) of these rules falls; and further provided, that no examination, count, verification and comparison for the purpose of this rule shall be within two months of or more than four months following a prior examination, count, verification and comparison made hereunder.(b) The examination, count, verification and comparison may be made either as of a date certain or on a cyclical basis covering the entire list of securities. In either case the recordation shall be effected within seven business days subsequent to the examination, count, verification and comparison of a particular security. In the event that an examination, count, verification and comparison is made on a cyclical basis, it shall not extend over more than one calendar quarter-year, and no security shall be examined, counted, verified or compared for the purpose of this rule less than two months or more than four months after a prior examination, count, verification and comparison.(c) The examination, count, verification and comparison shall be made or supervised by persons whose regular duties do not require them to have responsibility for the proper care and protection of the securities or the making or preservation of the subject records.(d) The Commissioner, may, upon written request, exempt from the provisions of this rule, either unconditionally or on specified terms and conditions, any broker-dealer who satisfies the Commissioner that it is not necessary in the public interest and for the protection of investors to subject the particular broker-dealer to certain or all of the provisions of this rule, because of the special nature of such person's business, the safeguards such person has established for the protection of customers' funds and securities or such other reason as the Commissioner deems appropriate.Cal. Code Regs. Tit. 10, § 260.241.6
1. New section filed 7-20-72; effective thirtieth day thereafter (Register 72, No. 30).
2. Amendment of subsection(a) filed 1-22-75; effective thirtieth day thereafter (Register 75, No. 4).
3. Amendment filed 4-27-84; effective thirtieth day thereafter (Register 84, No. 18). Note: Authority cited: Sections 25241 and 25610, Corporations Code. Reference: Section 25241, Corporations Code.
1. New section filed 7-20-72; effective thirtieth day thereafter (Register 72, No. 30).
2. Amendment of subsection(a) filed 1-22-75; effective thirtieth day thereafter (Register 75, No. 4).
3. Amendment filed 4-27-84; effective thirtieth day thereafter (Register 84, No. 18).