Question 1

What must Agents observe in the conduct of their business?

Accepted Answer

``` Agents must observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. Ch 04(4) ```

Question 2

How many Model Rules on Agents are there?

Accepted Answer

``` 7. Ch 04(4) ```

Question 3

Model Rules on Agents -- Agents shall not engage in the practice of (1/7)

Accepted Answer

1). Agents shall not engage in the practice of lending/borrowing money/securities to/from a customer -OR- acting as a custodian for money, securities, -OR- an executed stock power for a customer. Ch 04(4)

Question 4

What is a stock power?

Accepted Answer

``` A stock power: power of attorney given to a B-D, used to transfer ownership of the securities. Ch 04(4) ```

Question 5

Model Rules on Agents -- 2). Agents shall not effect transactions (including private securities transactions) not recorded on the regular books or records of the B-D which the agent represents (aka. “selling away”) UNLESS (2/7)

Accepted Answer

``` the transactions are authorized in writing by the B-D PRIOR TO the execution of the transaction. Ch 04(4) ```

Question 6

Model Rules on Agents -- 3). Agents shall not establish or maintain an account with fictitious information in order to (3/7)

Accepted Answer

``` execute transactions that are prohibited. Ch 04(4) ```

Question 7

What is an Outside Security Account?

Accepted Answer

``` an account at a firm other than the employing firm. Ch 04(4) ```

Question 8

What does an Agent do when they want to open an Outside Security Account?

Accepted Answer

the Agent must notify BOTH the employing firm and the executing firm BEFORE the account is opened. The employing firm must notify the Agent in WRITING of approval or disapproval of the request. Ch 04(4)

Question 9

Model Rules on Agents -- 4). Agents shall not share directly or indirectly in the profits or losses in the account of a customer, without

Accepted Answer

``` the written authorization of the customer AND the B-D, which the agent represents. Ch 04(4) ```

Question 10

Model Rules on Agents -- 5). Agents shall not divide or otherwise split the agent’s commissions, profits or other compensation from transaction with

Accepted Answer

``` any person not also registered as an agent for the same B-D, -OR- affiliated B-D. Ch 04(4) ```

Question 11

Model Rules on Agents -- No. 05: What is an affiliated B-D?

Accepted Answer

An affiliated B-D is a B-D that is under the same direct or indirect common control with the B-D that the Agent works for. ``` So, agents CAN share their commissions with another broker for the same B-D that the agent works for, or with another broker with a B-D affiliated with the B-D that the agent works for. Ch 04(4) ```

Question 12

Model Rules on Agents -- No. 05: Are Agents allowed to split commissions with agents who are registered and employees of the same B-D?

Accepted Answer

Yes. ``` Agents ARE allowed to split commissions with agents who are registered and employees of the same B-D. Ch 04(4) ```

Question 13

Model Rules on Agents -- No. 05: Do Agents have to notify their clients when they split commissions with agents who are registered and employees of the same B-D?

Accepted Answer

No. No client notification needed. the customer would not need to be informed of such an arrangement. Ch 04(4)

Question 14

Model Rules on Agents -- 6). Agents shall not exercise discretionary authority without

Accepted Answer

``` prior written authority, UNLESS the discretion is only for “time and price” in executing the order. Ch 04(4) ```

Question 15

Model Rules on Agents -- 7). Agents shall not commingle client's funds/securities

Accepted Answer

``` with agent’s assets. Ch 04(4) ```

Ch 04(4) NASAA Policy and Model Rules | Agents Flashcards

Explain the Standads of Commerical Honor and Just and Equitable Principals of Trade for Agents of Broker-Dealers

Brainscape's Knowledge GenomeTM

Ch 04(4) NASAA Policy and Model Rules | Agents Flashcards

Explain the Standads of Commerical Honor and Just and Equitable Principals of Trade for Agents of Broker-Dealers

Brainscape's Knowledge Genome^TM