Private Residence

A representative works from a private residence that does not meet the definition of a branch office or OSJ under the firm's classification criteria. A principal concludes the location therefore requires no supervisory review at all. Is this conclusion correct?

1. A.Yes — only locations meeting the branch or OSJ definition carry any inspection obligation under the firm's supervisory system.Wrong. Falling outside the branch/OSJ definition changes the applicable inspection cycle and scope; it does not remove the location from supervision entirely.
2. B.No, but only because any location where a registered person works from home automatically becomes an OSJ regardless of the activities conducted there.Wrong. Working from a residence does not automatically create OSJ status; OSJ classification depends on the actual functions performed there.
3. C.No — falling outside the branch/OSJ definition changes what type of inspection cycle applies, not whether the location is subject to any supervisory review; the firm's written supervisory procedures must still address how such locations are reasonably supervised.Correct. Non-branch, non-OSJ locations still fall within the firm's supervisory system, just under a different inspection scope and cycle than a full branch.
4. D.Yes, provided the representative signs an annual attestation confirming no branch-qualifying activity occurred at the location.Wrong. A self-attestation from the representative being supervised is not a substitute for the firm's own supervisory review of the location.

Why: No. Falling outside the branch/OSJ definition changes what type of inspection cycle and scope applies, not whether the location is subject to any supervisory review at all; the firm's written supervisory procedures must still address how such locations are reasonably supervised.

A representative occasionally uses her private residence to make phone calls to existing customers, but never meets customers there, holds no funds or securities at the residence, and all her business is conducted through and supervised from her assigned branch office. The firm assumes this residence automatically does not need to be registered as a branch office. What must the principal confirm?

1. A.That the specific conditions that exclude a private residence from branch office registration are actually met in practice, such as no customer meetings occurring there and no funds or securities being handled there, rather than assuming any private residence is automatically excluded regardless of the actual activity occurring at it.Correct. The exclusion depends on the actual conditions of use being met, not simply on the location being a private residence.
2. B.Nothing further needs to be confirmed, since any location that is a representative's private residence is automatically excluded from branch office registration regardless of what activity occurs there.Wrong. This treats residential status alone as sufficient rather than the actual conditions of use.
3. C.The residence must be registered as a branch office regardless of the limited activity occurring there, since any location where business-related phone calls are made requires branch registration.Wrong. This overstates the registration requirement and ignores the recognized limited-activity exclusion.
4. D.The concern applies only if the representative lives in a different state from her assigned branch office; residences in the same state as the branch require no further confirmation.Wrong. This invents a same-state-versus-different-state distinction that is not the basis for whether the exclusion's conditions are met.

Why: The principal must confirm that the specific conditions that exclude a private residence from branch office registration are actually met in practice, such as no customer meetings occurring there and no funds or securities being handled there, rather than assuming any private residence is automatically excluded regardless of the actual activity occurring at it.