Series 99 Customer Account Handling & Documentation 2 — Questions and Answers
Question 1: A customer wants to add a joint account holder after the account is already opened. Which document must be updated?
- New Account Form
- Customer Identification Program record
- Account Agreement with joint holder signature (Correct answer)
- Trade confirmation slip
Correct answer: Account Agreement with joint holder signature
Adding a joint account holder requires an updated Account Agreement signed by the new party.
Question 2: Under FINRA Rule 4512, how long must a member firm retain customer account records?
- 2 years from account opening
- 3 years from account opening
- 6 years from account opening
- The life of the account plus 6 years (Correct answer)
Correct answer: The life of the account plus 6 years
FINRA Rule 4512 requires retention of customer account records for the life of the account plus 6 years.
Question 3: A discretionary account allows a registered representative to:
- Trade without prior customer approval on each order (Correct answer)
- Execute trades only with written approval each time
- Accept gifts from the customer freely
- Open accounts for minors independently
Correct answer: Trade without prior customer approval on each order
A discretionary account grants the registered representative authority to trade without prior approval on individual transactions.
Question 4: Which of the following best describes a 'street name' account?
- An account opened using a pseudonym
- Securities held in the broker-dealer's name on behalf of the customer (Correct answer)
- An account restricted to institutional clients
- A cash-only account with no margin privileges
Correct answer: Securities held in the broker-dealer's name on behalf of the customer
In a 'street name' account, the broker-dealer holds securities in its own name for the benefit of the customer.
Question 5: When must a broker-dealer verify the identity of a new customer under the Customer Identification Program (CIP)?
- Within 30 days of account opening
- Before or at the time of account opening (Correct answer)
- Only when the customer places a trade over $10,000
- At annual account review
Correct answer: Before or at the time of account opening
CIP rules require identity verification before or at account opening, not after trading begins.
Question 6: A customer submits a signed options agreement but fails to return the options risk disclosure document acknowledgment. The firm should:
- Allow full options trading immediately
- Restrict the account to covered options only until acknowledgment is received (Correct answer)
- Close the account
- Allow trading but flag for compliance review after 90 days
Correct answer: Restrict the account to covered options only until acknowledgment is received
Without the signed options disclosure acknowledgment, the firm must restrict trading to covered strategies.
Question 7: A margin account customer's equity falls below the maintenance margin requirement. The firm must issue a:
- Pattern day trader warning
- Margin call (maintenance call) (Correct answer)
- Reg T call
- Suitability notice
Correct answer: Margin call (maintenance call)
When equity drops below maintenance margin, the firm issues a maintenance (margin) call requiring the customer to deposit additional funds.
Series 99 Customer Account Handling & Documentation 2
A customer wants to add a joint account holder after the account is already opened.
Which document must be updated?