Trading, Accounts & Prohibited ActsQuestion 296 of 398
A representative has valid written discretionary authority accepted by the firm. She buys a suitable stock in the client's account without calling first. Is this a violation?
a.Yes, all trades require a phone call each time
b.Yes, discretionary authority is never valid
c.No, because valid discretionary authority permits trading without prior consultation for each order, if the trade is suitable and properly recorded
d.No, but only if the client is a family member
Explanation
With valid, firm-accepted written discretionary authority, the representative may enter suitable orders without contacting the customer for each trade, provided orders are marked discretionary and the account is properly supervised. Without such authority, the same trade would be unauthorized.
Law Reference: FINRA Rule 3260Practice all 398 questions free — no signup required.
Related questions on this topic
- Two unrelated investors each want their portion of a joint account to pass to their own heirs, not to each other, upon death. Which registration should they choose?
- When gathering information to make suitable recommendations for a new customer, which of the following is LEAST relevant to the customer's investment profile?
- Which situation is generally NOT illegal insider trading?
- What is the key difference between a CTR and a SAR?
- The prohibition on 'selling away' exists primarily to ensure that:
- A representative wants to include the phrase 'this fund is guaranteed to double your money in one year' in a brochure sent to retail clients. Under FINRA communication standards, this is:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review