Series 99 Customer Account Handling & Documentation 4 — Questions and Answers
Question 1: Under Regulation S-P, broker-dealers must provide customers with a privacy notice:
- Only upon customer request
- At account opening and annually thereafter (Correct answer)
- Every three years
- Only when sharing data with affiliates
Correct answer: At account opening and annually thereafter
Regulation S-P requires firms to provide an initial privacy notice at account opening and an annual notice thereafter.
Question 2: A customer submits an unsigned new account form. The operations team should:
- Open the account and obtain the signature within 30 days
- Return the form and require signature before opening the account (Correct answer)
- Open the account if the customer is an existing client
- Forward to compliance for a waiver
Correct answer: Return the form and require signature before opening the account
An unsigned new account form is incomplete; the firm must obtain the customer's signature before opening the account.
Question 3: Which account type is established under the Uniform Transfers to Minors Act (UTMA) and managed by a custodian?
- 529 Plan account
- UTMA custodial account (Correct answer)
- Roth IRA for minors
- Educational savings trust
Correct answer: UTMA custodial account
A UTMA custodial account is set up for a minor with a designated custodian who manages the assets until the minor reaches the age of majority.
Question 4: A customer's address change request received by phone should be:
- Processed immediately without further verification
- Verified using a callback or written confirmation before processing (Correct answer)
- Only accepted if submitted in writing via mail
- Approved by the customer's registered representative
Correct answer: Verified using a callback or written confirmation before processing
Address changes requested by phone require verification (callback or written confirmation) to prevent fraud before the change is processed.
Question 5: In a corporate account, which document establishes who is authorized to trade on behalf of the entity?
- Articles of Incorporation
- Corporate Resolution (Correct answer)
- EIN confirmation letter
- Operating Agreement
Correct answer: Corporate Resolution
A Corporate Resolution identifies the officers or individuals authorized to act on the entity's behalf for trading purposes.
Question 6: A pattern day trader designation requires a minimum equity of:
- $10,000
- $15,000
- $25,000 (Correct answer)
- $50,000
Correct answer: $25,000
FINRA Rule 4210 requires pattern day traders to maintain a minimum equity of $25,000 in their margin account.
Question 7: When a beneficiary designation on a brokerage account conflicts with the customer's will, which document generally controls the disposition of account assets?
- The will, because it is a legal document
- The beneficiary designation on the account, as it supersedes the will (Correct answer)
- The most recently dated document
- A court must decide in every case
Correct answer: The beneficiary designation on the account, as it supersedes the will
Beneficiary designations on brokerage accounts are contractual and generally supersede conflicting will provisions for those specific assets.
Series 99 Customer Account Handling & Documentation 4
Under Regulation S-P, broker-dealers must provide customers with a privacy notice: