to provide training to enable the customer to become a proprietary trader. In fact, the firm accepted only experienced traders, and referred new, inexperienced traders to an affiliated firm, in an apparent "bait and switch" tactic. Day-trading firms should continue to focus on presenting truthful and balanced advertising. The SROs will continue to carefully scrutinize advertising of day-trading firms under SRO rules. G. Financial Responsibility and Record Keeping Rules Day-trading firms, like all broker-dealers registered with the Commission, are subject to financial responsibility rules under the Exchange Act. Specifically, all broker-dealers must comply with the net capital rule (Section 15(c) of the Exchange Act and Rule 15c3-1 thereunder). The net capital rule requires registered broker-dealers to maintain a specified amount of liquid assets as a method of protection for customers and creditors. In addition, registered broker-dealers are required to make and keep current certain books and records, and to preserve these books and records. 30 Accurate and current books and records are necessary to determine a broker-dealer's true financial condition and to support the firm's reported net capital position. 1. Net Capital Compliance Ensuring compliance with the net capital rule and financial record-keeping requirements was an important component in the Staff's examinations. Day-trading firms generally encourage traders to end the trading day "flat," (i.e., without holding long or short securities positions in their accounts overnight), to limit the risk associated with these securities. The Staff found, however, that day-traders at several firms held sizeable leveraged long and short positions both