Table of Contents
SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 11710 is the foundational rule of the FINRA Rule 11700 Reclamations and Rejections subsection — providing the operative definitions of reclamation and rejection, the Uniform Reclamation Form requirement (completing the set of 1971 Four Uniform Forms alongside the Uniform Comparison, Uniform Delivery Ticket, and Uniform Transfer Instruction Form examined throughout this dictionary's coverage), the timing and settlement mechanics for returned or reclaimed securities, and two specific reclamation timeframes for minor irregularities and wrong-form certificates.
The rule operates through five lettered paragraphs.
Paragraph (a), Definition, defines reclamation as a claim for the right to return or demand the return of a previously-accepted security, and establishes that securities presented for delivery and refused for valid reason are deemed a rejection for purposes of FINRA Rules 11710 and 11720, inclusive.
Paragraph (b), Uniform Reclamation Form, requires that a properly executed Uniform Reclamation Form accompany securities on reclamation or return, with absence of the form permitting the receiving broker to sell-out under FINRA Rule 11820 within three business days.
Paragraph (c), Time for Delivery of Reclamation and Manner of Settlement, establishes the community-hours framework for returns and reclamations and the immediate-exchange-or-money-amount settlement mechanism, with a deemed-failing-to-deliver consequence for the original deliverer pending proper delivery.
Paragraph (d), Minor Irregularities, establishes a 15-day reclamation period for irregularities affecting only the currency of the security in the market, extended to 45 days for securities issued under foreign jurisdiction.
Paragraph (e), Wrong Form of Certificate, establishes a 15-day reclamation period for certificates not good delivery but exchangeable without charge for good delivery certificates.
FINRA Rule 11710 was amended by SR-FINRA-2010-030 effective December 15, 2010, with prior amendments effective September 1, 1969 and December 1, 1972. One selected notice is associated — Regulatory Notice 10-49.
FINRA Rule 11710 sits within the 11700 Reclamations and Rejections subsection of the 11000 Uniform Practice Code as its first substantive rule, immediately following FINRA Rule 11700's series marker and immediately preceding FINRA Rule 11720's irregular delivery, transfer refused, and lost or stolen securities framework.
FINRA Rule 11710(a) establishes the operative definition this dictionary anticipated throughout its coverage — the term "reclamation" as used in this Code shall mean a claim for the right to return or the right to demand the return of a security which has been previously accepted.
This definition confirms the distinction this dictionary's FINRA Rule 11700 entry drew between reclamation and rejection — a reclamation is, by this definition, necessarily a post-acceptance phenomenon. The security has been previously accepted, and the reclamation represents a claim for the right to return that already-accepted security, or to demand its return (presumably from a subsequent holder, where the originally-accepting party has itself passed the security along before the defect was discovered).
The second sentence then defines rejection by contrast — securities which have been presented for delivery on a transaction and which for a valid reason have been refused shall within the meaning of Rules 11710 and 11720, inclusive, be deemed a rejection for the purposes of these Rules. This confirms the pre-acceptance character of a rejection — securities presented for delivery but refused, for valid reason, before acceptance occurs. The within the meaning of Rules 11710 and 11720, inclusive scoping language is notable — it confirms that the rejection definition applies specifically to FINRA Rules 11710 and 11720 (and, by inclusive, any rules between them — though the confirmed child rule list shows no rules between 11710 and 11720 themselves), without extending this specific definitional scope to FINRA Rules 11721, 11730, or 11740. This suggests that FINRA Rule 11710's general provisions, while establishing both the reclamation and rejection definitions, may have differing degrees of applicability across the subsection's five rules depending on whether a given rule's subject matter implicates the rejection concept specifically.
FINRA Rule 11710(b)(1) establishes the documentary requirement — a properly executed Uniform Reclamation Form must accompany securities on reclamation or return. The accompanying footnote confirms this form's origin — specifications for use of the Uniform Reclamation Form are contained in the Final Report of the Banking and Securities Industry Committee entitled "Four Uniform Forms," dated December 22, 1971.
This confirmation completes the set of four standardized forms this dictionary has now traced across its entire coverage of the Uniform Practice Code — the Uniform Comparison (FINRA Rule 11210), the Uniform Delivery Ticket (FINRA Rule 11360), the Uniform Transfer Instruction Form (FINRA Rule 11550), and now the Uniform Reclamation Form (FINRA Rule 11710). Each of these four forms corresponds to a distinct stage of the transaction lifecycle this dictionary has traced throughout its coverage — trade confirmation, delivery, registered-securities transfer, and now reclamation or return — with the Uniform Reclamation Form representing the lifecycle's final documentary stage, addressing what happens when a delivered security must come back.
FINRA Rule 11710(b)(2) establishes the consequence of non-compliance with this documentary requirement — any security reclaimed or returned on a transaction without a properly executed Uniform Reclamation Form as prescribed within this Rule may, at the option of the receiving broker, be "sold-out" pursuant to Rule 11820, however, in no event later than three business days after receipt of the receiving broker or its agent. This provision establishes a sell-out remedy under FINRA Rule 11820 — the sell-out counterpart to the buy-in framework of FINRA Rule 11810 this dictionary has anticipated since FINRA Rule 11100(c) — at the receiving broker's option, where a reclaimed or returned security arrives without the required Uniform Reclamation Form. The three-business-day outer limit on this option's exercise establishes a definite window within which the receiving broker must act if it wishes to invoke the sell-out remedy for this specific documentary deficiency, after receipt of the non-conforming reclamation or return.
FINRA Rule 11710(c)(1) establishes the timing framework for returns and reclamations — a security with an irregularity having been delivered may be returned or reclaimed between the hours established by rule or practice in the community where the delivery or reclamation is to be made. This community-hours framework directly parallels FINRA Rule 11320(h)'s time-and-place-of-delivery standard and FINRA Rule 11410(a)'s business-hours-in-the-community standard for draft presentation — both examined earlier in this dictionary's coverage — confirming that the Uniform Practice Code applies a consistent local-custom-based hours standard across delivery, draft presentation, and now reclamation and return.
FINRA Rule 11710(c)(2) establishes the substantive settlement mechanism for the return or reclamation itself — when a security is returned or reclaimed, the party who originally delivered it shall immediately give the party returning it either the security in proper form for delivery in exchange for the security originally delivered, or the money amount of the contract. This provision establishes two alternative responses the original deliverer must make, immediately, upon a return or reclamation: either provide a corrected security — the security in proper form for delivery — in exchange for the defective security being returned, or provide the money amount of the contract — effectively unwinding the transaction's monetary consideration.
The final sentence establishes a default consequence for the money-amount alternative — in the latter case, unless otherwise agreed, the party to whom the security is returned shall be deemed to be failing to deliver the security until such time as a proper delivery is made. This deemed-failing-to-deliver consequence connects directly to the fail to receive and fail to deliver concepts this dictionary has encountered in connection with FINRA Rule 11630(f)'s buy-in remedy — where the original deliverer chooses to return the money amount of the contract rather than immediately providing a corrected security, that party is treated, going forward, as if it were failing to deliver the security — a status that presumably carries its own consequences under the broader FINRA Rule 11800 series' close-out framework this dictionary anticipates examining next, until such time as a proper delivery is made to resolve that fail-to-deliver status.
FINRA Rule 11710(d) establishes a specific reclamation timeframe for a particular category of defect — reclamation for an irregularity which affects only the currency of the security in the market shall be made within 15 days from the day of original delivery, except that, if the security is issued under the jurisdiction of a foreign country, the period for reclamation under this section shall be 45 days from the day of original delivery.
The phrase affects only the currency of the security in the market establishes the category of irregularity this 15-day (or 45-day) period addresses — irregularities affecting whether the security, as delivered, represents the current, valid form in which that security trades in the market (as distinguished from, for example, a superseded or outdated form that has since been replaced by a newer form through some corporate action or reissuance). This currency-of-the-security concern connects to the kind of issue this dictionary's FINRA Rule 11510 entry examined in connection with temporary certificates — a temporary certificate that remains outstanding after permanent certificates have become available represents precisely this kind of currency irregularity, where the certificate delivered, while perhaps not defective in any more fundamental sense, simply does not represent the currently-valid form for that security.
The three-times-longer 45-day period for securities issued under the jurisdiction of a foreign country parallels the broader pattern of cross-border accommodation this dictionary has traced throughout its coverage — FINRA Rule 11140(b)(3)'s ADR and foreign securities Committee-designation authority, FINRA Rule 11310(e)'s foreign settlement exclusion, FINRA Rule 11540(b)'s unlimited reclamation period for certain foreign securities stoppages, and FINRA Rule 11550(i)'s foreign internal securities carve-out all reflect, in their respective contexts, a recognition that foreign-connected securities may present additional complexity — communication delays, different market infrastructure, or other factors — that warrant accommodation relative to the domestic baseline. FINRA Rule 11710(d)'s tripling of the reclamation period for foreign-jurisdiction securities reflects this same general pattern in the specific context of currency-of-the-security reclamations.
FINRA Rule 11710(e) establishes a 15-day reclamation period for a distinct category of defect — reclamation, by reason of the fact that a form of certificate was delivered which was not a good delivery, but which is exchangeable without charge for a certificate which is a good delivery, shall be made within 15 days from the day of original delivery.
This provision addresses a specific scenario — a certificate that, as delivered, was not good delivery under whatever good delivery standard applies (the various standards this dictionary has examined throughout FINRA Rules 11510 through 11650), but which is exchangeable without charge for a certificate that would be good delivery. The exchangeable without charge qualifier is significant — it distinguishes this category from scenarios where correcting the not-good-delivery defect would itself impose some cost (in which case other provisions of the Uniform Practice Code, such as FINRA Rule 11510's allocation of the temporary-to-permanent exchange burden to the delivering party, or FINRA Rule 11650's transfer agent service charge framework, might come into play regarding who bears that cost) — here, the exchange itself is without charge, and FINRA Rule 11710(e) simply establishes the 15-day window within which a reclamation premised on this wrong-form-but-freely-exchangeable basis must be made.
The shared 15-day period between paragraph (d)'s domestic minor-irregularity reclamations and paragraph (e)'s wrong-form-of-certificate reclamations suggests these two categories — currency-of-the-security irregularities for domestic securities, and freely-exchangeable wrong-form certificates — are treated as comparably significant for timing purposes, both warranting the same 15-day window, as distinguished from paragraph (d)'s extended 45-day window for the foreign-jurisdiction category specifically.
Supplementary Material .01 sets forth the Uniform Reclamation Form — confirmed from the FINRA.org page as a form subject to the rules and regulations of Stock Clearing Corp., Annex Clearing Corp., National Clearing Corp., and the FINRA Uniform Practice Code, containing fields for: the receiver's name and a RECLAIMED TO REC No. field; the deliverer's name, a RECLAIMED BY DEL. No. field, and date of return; quantity, security description, and amount; and a checklist of common reclamation reasons including Wrong Security (with a Should Be field), Wrong Money (with an Our Money field), Carries Due Bill, Duplicates Delivery, Needs Signature Guarantee, Wrong Settlement Date, Needs Tax Stamp, No Instructions, Release Power of Attorney, Needs Legal Opinion, Coupon Missing, Needs Better Account Date, and an Other - Explanation field; plus the name and telephone number of the person making the reclamation, and instructions that copies 1 and 2 be attached to the certificate while copies 3 and 4 are retained by the deliverer.
This checklist of reclamation reasons functions as a kind of summary index across this dictionary's coverage of the Uniform Practice Code's good delivery framework, much as FINRA Rule 11220's illustrative phrases functioned as an index into the Code's substantive terminology. Carries Due Bill connects directly to FINRA Rule 11630's due-bill framework. Needs Signature Guarantee connects to FINRA Rule 11550(h)'s guarantee requirement. Needs Tax Stamp connects to FINRA Rule 11340's stamp tax framework. Release Power of Attorney connects to FINRA Rule 11550(g)'s power of substitution chain. Coupon Missing connects to FINRA Rule 11610(a)'s coupon attachment requirement. Wrong Settlement Date connects to FINRA Rule 11320's dates of delivery framework. Each of these checklist items represents a specific category of defect that this dictionary's coverage has examined as a component of the good delivery standards FINRA Rules 11510 through 11650 establish — with the Uniform Reclamation Form providing the standardized mechanism for identifying which specific category of defect underlies a given reclamation.
The amendment notation accompanying Supplementary Material .01 — Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010. Amended eff. Sept. 1, 1969; Dec. 1, 1972 — confirms FINRA Rule 11710's amendment history, with the September 1, 1969 and December 1, 1972 dates situating the Uniform Reclamation Form's origins close in time to FINRA Rule 11362's November 1, 1971 and December 1, 1972 amendments examined earlier in this dictionary's coverage — suggesting these provisions may have been part of related early-1970s standardization efforts surrounding the broader 1971 Four Uniform Forms initiative.
FINRA Rule 11710 connects to FINRA Rule 11100(c) — whose non-cancellation principle and direction to the FINRA Rule 11810 buy-in and FINRA Rule 11820 sell-out remedies establishes the broader framework within which FINRA Rule 11710(b)(2)'s sell-out option and FINRA Rule 11710(c)(2)'s deemed-failing-to-deliver consequence operate. It connects to FINRA Rule 11140(b)(3), FINRA Rule 11310(e), FINRA Rule 11540(b), and FINRA Rule 11550(i) — as fellow members of the broader pattern of cross-border accommodation that FINRA Rule 11710(d)'s 45-day foreign-jurisdiction reclamation period represents. It connects to FINRA Rules 11210, 11360, and 11550 — whose Uniform Comparison, Uniform Delivery Ticket, and Uniform Transfer Instruction Forms FINRA Rule 11710(b)'s Uniform Reclamation Form completes as the fourth member of the 1971 Four Uniform Forms. It connects to FINRA Rule 11220 — as a structural parallel for Supplementary Material .01's checklist of reclamation reasons, functioning as an index into the Code's substantive terminology much as FINRA Rule 11220's illustrative phrases did. It connects to FINRA Rule 11320(h) and FINRA Rule 11410(a) — whose community-hours frameworks FINRA Rule 11710(c)(1) directly parallels for reclamation and return timing. It connects to FINRA Rule 11340, FINRA Rule 11510, FINRA Rule 11550(g) and (h), FINRA Rule 11610(a), and FINRA Rule 11630 — each corresponding to one or more items in Supplementary Material .01's reclamation-reasons checklist. It connects to FINRA Rule 11650 — whose transfer agent service charge framework provides context for FINRA Rule 11710(e)'s exchangeable without charge qualifier. It connects to FINRA Rule 11700 as its parent series marker. It connects directly to FINRA Rule 11720 — the next rule in the subsection, which paragraph (a)'s rejection definition explicitly extends to alongside FINRA Rule 11710 itself. And it connects to FINRA Rules 11810 and 11820 — the buy-in and sell-out frameworks this dictionary anticipates examining within the FINRA Rule 11800 series, both directly invoked by FINRA Rule 11710's provisions.
FINRA Rule 11710 is tested on the Series 7 and Series 24 examinations as the foundational reclamation and rejection rule — establishing the operative definitions, the Uniform Reclamation Form requirement, the settlement mechanics for returns and reclamations, and specific timeframes for minor irregularities and wrong-form certificates.
The key points to retain are these: FINRA Rule 11710(a) defines reclamation as a claim for the right to return or demand the return of a previously-accepted security, and defines rejection — for purposes of FINRA Rules 11710 and 11720, inclusive — as securities presented for delivery and refused for valid reason; FINRA Rule 11710(b) requires a properly executed Uniform Reclamation Form — the fourth of the 1971 Four Uniform Forms, completing the set alongside the Uniform Comparison, Uniform Delivery Ticket, and Uniform Transfer Instruction Form — to accompany securities on reclamation or return, with absence of the form permitting the receiving broker to sell-out under FINRA Rule 11820 within three business days of receipt; FINRA Rule 11710(c) establishes a community-hours framework for returns and reclamations and requires the original deliverer to immediately provide either a corrected security or the money amount of the contract, with the latter triggering a deemed-failing-to-deliver status until proper delivery is made; FINRA Rule 11710(d) provides a 15-day reclamation period for irregularities affecting only the currency of the security in the market, extended to 45 days for securities issued under foreign jurisdiction; FINRA Rule 11710(e) provides a 15-day reclamation period for certificates not good delivery but exchangeable without charge for good delivery certificates; Supplementary Material .01's reclamation-reasons checklist functions as an index across the good delivery framework this dictionary has examined throughout FINRA Rules 11510 through 11650; and the rule was amended December 15, 2010 through SR-FINRA-2010-030, with prior amendments effective September 1, 1969 and December 1, 1972, and one selected notice, 10-49.
