Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

Start a Study Session Sign up for Question of the Day
Which of the following is not a prohibited practice for a broker-dealer?
  1. waiting 36 hours before mailing a check after receiving a request for a cash withdrawal from a client if the client has that much cash available in his account
  2. requiring that a client who is engaged in margin transactions leave the securities with the broker-dealer in “street name”
  3. recommending a security to a new client without first ascertaining that client’s level of risk tolerance
  4. executing a trade for an account holder based on instructions from the account holder’s spouse
Explanation
Answer: B - It is not prohibited for a broker-dealer to require that a client who is engaging in margin transactions to leave the securities with the broker in “street name.” This is the normal business practice. A margin transaction means that the client is borrowing part of the funds he’s investing, and the securities are serving as collateral for the loan. It is illegal to delay sending a check upon receiving a request for a cash withdrawal, assuming the client has the cash available in his account; to recommend a security to a client without knowing anything about him, including his tolerance for risk; and to execute a trade on instructions from anyone other than the account holder unless that party has at least limited power of attorney.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz