Ethics & Professional Responsibility Flashcards
7 cards from real Series 66 – Uniform Combined 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 7 Ethics & Professional Responsibility flashcards as text
An agent wants to take a part-time job as a consultant for an unrelated company. What should the agent do first?
Answer: Notify the employing firm and follow its approval procedures
Outside business activities generally require notice to, and approval by, the employer so conflicts can be supervised.
An agent borrows money from a client who is not a financial institution. This is generally:
Answer: A dishonest or unethical practice
Borrowing from or lending to clients is prohibited unless the client is a financial institution or an affiliate such as in the lender's business.
An agent proposes sharing in the gains and losses of a client's account. Which is required?
Answer: Written approval from the employer and the client, with sharing proportional to the agent's contribution
Profit-and-loss sharing requires written authorization from the employer and client, and the agent's share must be proportional to capital contributed.
A firm has no written procedures for reviewing its agents' recommendations and trades. What is the primary deficiency?
Answer: Failure to supervise
Firms must establish, maintain and enforce written supervisory procedures reasonably designed to detect violations.
An agent sells shares in a private placement to clients without telling the employing firm. This is known as:
Answer: Selling away
Private securities transactions outside the firm's knowledge, known as selling away, violate employer notice and supervision requirements.
A client is traveling, so an agent signs the client's name on a new account form with the client's verbal permission. This is:
Answer: Unethical, because forging a client's signature is prohibited even with permission
Signing a client's name on documents is a prohibited practice, regardless of verbal consent.
An agent uses the title "Certified Senior Retirement Expert" with only a weekend course and no recognized accreditation. This is:
Answer: Potentially misleading under senior designation rules
Using senior designations that imply expertise or credentials the agent lacks is a misleading practice under state rules.
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