SIE Customer Accounts and Suitability

Question 1

Which document must be completed before a new brokerage account is opened?

Accepted Answer

New Account Form (customer profile)

Answer

A new account form collecting the customer's financial information, investment objectives, and risk tolerance must be completed before trading.

Question 2

What is the 'suitability' obligation under FINRA rules?

Accepted Answer

Recommendations must be appropriate based on the customer's financial profile and objectives

Answer

FINRA's suitability rule requires that investment recommendations be appropriate for the specific customer based on their financial situation and goals.

Question 3

A discretionary account allows a broker to:

Accepted Answer

Trade customer funds without prior approval for each transaction

Answer

Discretionary accounts grant the broker written authority to make trades without contacting the customer for each decision.

Question 4

A joint tenancy with right of survivorship (JTWROS) account means:

Accepted Answer

Upon one owner's death, their share passes to the surviving owner(s)

Answer

In a JTWROS account, when one owner dies, ownership automatically passes to the surviving account holder(s) outside of probate.

Question 5

What is the primary purpose of the USA PATRIOT Act requirement for customer identification programs (CIP)?

Accepted Answer

To verify customer identity and prevent money laundering

Answer

CIP requirements under the PATRIOT Act require firms to verify customer identity to combat money laundering and terrorist financing.

SIE - Securities Industry Essentials Practice Test

SIE - Securities Industry Essentials Practice Test

SIE Customer Accounts and Suitability