Communications with Clients and Ethical Practices Flashcards
6 cards from real Series 63 – Uniform Securities Agent State Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Communications with Clients and Ethical Practices flashcards as text
Under the USA, what must an agent do before executing a transaction that was not solicited by the agent?
Answer: Determine that the transaction is not prohibited and that the client understands the nature of the investment
Even for unsolicited transactions, agents must ensure the transaction is not prohibited and that clients have sufficient information to make informed decisions.
What is a 'hold in street name' arrangement in securities accounts?
Answer: Securities held by the broker-dealer in the firm's name on behalf of the client, rather than in the client's name
Street name accounts hold securities in the broker-dealer's name while the beneficial ownership belongs to the client, facilitating easier transfer and custody.
Under the USA, investment advisers are generally required to maintain books and records for a minimum of how many years?
Answer: Five years
Investment advisers are generally required to maintain their books and records for a minimum of five years under state securities regulations.
Under the USA, what is the purpose of requiring broker-dealers to send trade confirmations to clients?
Answer: To provide clients with written notice of transaction details including price, quantity, and commission, allowing verification of trades
Trade confirmations give clients written documentation of their transactions, allowing them to verify accuracy and identify unauthorized or erroneous trades.
Under the USA, which of the following must be included on a client account application to establish suitability?
Answer: Information about the client's financial situation, investment objectives, and risk tolerance
Account applications must gather financial situation, investment objectives, and risk tolerance information to enable suitability determinations for future recommendations.
Under the USA, what is the 'cooling-off period' for a newly registered securities offering?
Answer: The period between the filing of the registration statement and its effective date, during which offers but not sales may be made
The cooling-off period is the time between registration filing and effectiveness during which preliminary prospectuses may circulate but actual sales cannot be made.
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