Opening a brokerage account is a fairly easy process these days. But many brokers ask for very sensitive information like who your employer is and where they’re located. TD Ameritrade does too and if you’re interested in choosing them as your broker, you have a right to know why…
TD Ameritrade asks for your employer information because FINRA and SEC regulations require them to. FINRA requires it because TD Ameritrade could make investment recommendations to you. Now, the SEC needs this information to ensure that no new customer has been laundering money and then uses it to invest.
In this article, I will:
- Outline a couple more reasons TD Ameritrade needs employer information,
- Examine if all brokers require this,
- Answer if TD Ameritrade sells your personal info, and
- Let you know what other information you’re expected to provide TD Ameritrade with.
Let’s get to it…
What Other Reasons Does TD Ameritrade Have for Asking for Your Employer Information?
Preventing Insider Trading
TD Ameritrade also needs your employer information to prevent insider trading. If you work for certain financial institutions, the SEC must know so they restrict or review your account.
On top of that, your employer may be a public company that you could buy and sell stocks of. TD Ameritrade will need you to disclose who your employer is so they can restrict trading for this particular firm.
Confirming Eligibility for Trading on Margin
Trading on margin requires assurance that you have a legitimate source of income. When you get a margin call, you should be able to meet them, after all. Employer information helps TD Ameritrade grant you access to margin trading.
It also needs to be mentioned that some other info to help confirm your margin trading eligibility is needed: net worth and annual income. We will talk about this data in a bit…
Do All Brokers Require Employer Information?
Yes, all legitimate brokerage firms require your employer information. It’s simply a matter of whether FINRA and the SEC require it or not. The brokers themselves are not in a position to have the option to not ask for it.
But it’s not such a big deal. After you understand why they need it, you might feel safer that they don’t use it in any unethical way or not. Which brings us to…
Does TD Ameritrade Sell your Personal Information?
No, TD Ameritrade does not sell your personal information to anyone. They only need the information they ask for personal use as every broker does. Don’t worry; your personal info is safe with them.
While they do not sell your personal information, they might share it within the limits imposed by Federal law.
They state themselves that they will share your data with affiliates for business purposes. But when it comes to these affiliates marketing to you, you have the option to restrict TD Ameritrade from sharing it. Just give them a call or get in touch with them via email to learn how.
What Other Information Does TD Ameritrade Ask For?
Let’s now take a look at some other bits of information that TD Ameritrade will ask from you…
Social Security or Taxpayer Identification Number
TD Ameritrade will also ask you for your social security or Taxpayer Identification Number (TIN). This requirement to open an account is due to FINRA and SEC requiring it as well.
The reason is simple: TD Ameritrade will need to report to the IRS how much you earn from trading securities. On top of that, they will also need to confirm your identity to limit money laundering.
Your Driver’s License or Passport Details
Either your driver’s license or passport details will help TD Ameritrade comply with its obligations as outlined in the USA PATRIOT Act.
Net Worth and Annual Income
TD Ameritrade will also ask you to state how much you earn per year and how much your net worth is. This is also to comply with the government’s regulations.
More precisely, if TD Ameritrade is to make any investment recommendation to you, the FINRA and SEC require them to collect this information.
Trusted Contact Person
It’s not 100% certain, but TD Ameritrade may also ask you to add a trusted contact person that they can get in contact with. More specifically, you may be asked to give them a name, an address, and a telephone number.
This is usually completely optionable and you don’t have to do it if you don’t want to. But it may be a good idea to do so if your account gets hacked. More so, the broker may want to confirm your contact information at some point and this is an easy way to do so without bothering you.
As I already told you, TD Ameritrade needs to comply with FINRA and SEC regulations and that’s why they ask you to share your employer information with them. FINRA will need it to confirm that you’re eligible to receive investment recommendations while the SEC needs it to prevent money laundering.
You should also keep in mind that there are two other reasons TD Ameritrade will probably need this information: confirming that you don’t work for a public company so they restrict your account and making sure you will be able to cover your margin calls.
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Thanks for reading and have a great day!
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