SIE Customer Accounts and Suitability 3

Question 1

Reg BI (Regulation Best Interest) requires broker-dealers to:

Accepted Answer

Act in the best interest of retail customers when making recommendations

Answer

Act only in a fiduciary capacity at all times

Answer

Eliminate all sales commissions

Answer

Recommend only no-load mutual funds

Question 2

A tenants in common (TIC) account differs from JTWROS in that:

Accepted Answer

Each TIC owner's share passes to their estate upon death, not to co-owners

Answer

TIC accounts cannot be held by more than two people

Answer

TIC accounts are only for retirement assets

Answer

TIC owners must hold equal shares

Question 3

What information is required on a new account form under FINRA rules?

Accepted Answer

Customer's name, address, tax ID, investment objectives, financial situation, and risk tolerance

Answer

Only the customer's name and tax ID

Answer

Only financial information verified by an accountant

Answer

References from two existing brokerage clients

Question 4

A churning violation occurs when a broker:

Accepted Answer

Excessively trades a customer's account primarily to generate commissions

Answer

Trades securities at a loss to generate tax benefits

Answer

Recommends the same security to multiple customers

Answer

Delays execution of customer orders

Question 5

What must occur before a broker-dealer executes an options trade in a customer's account?

Accepted Answer

Options agreement must be signed and account must be approved for options trading

Answer

The customer must be an accredited investor

Answer

The customer must have a minimum of $100,000 in the account

Answer

The trade must be approved by FINRA in advance

Question 6

Under the Bank Secrecy Act, currency transaction reports (CTRs) must be filed for cash transactions exceeding:

Accepted Answer

$10,000

Answer

$1,000

Answer

$5,000

Answer

$25,000