customer accounts

Question 1

what form is required for all new accounts?

Answer 1

new account form

Question 2

when must a copy of new account form be sent to customer to verify information?

Answer 2

within 30 days

Question 3

how often must a firm verify account information?

Answer 3

every 36 months

Question 4

when is a privacy notice sent to customers?

Answer 4

• at time account is opened

- annually after account is opened

Question 5

describe a joint account

Answer 5

requires two or more signatures

Question 6

describe a JTWROS

Answer 6

joint tenants with rights of survivorship

-assets divided evenly

Question 7

describe a TIC

Answer 7

tenants in common

-assets divided per customer instructions

Question 8

what do partnership agreements contain?

Answer 8

• partnership resolution

- partnership agreement

Question 9

describe power of attorney on limited trading authorization

Answer 9

allows a person to trade on another persons account only.

Question 10

describe power of attorney on full trading authorization

Answer 10

allows a person to trade and withdraw money and securities on another persons account

Question 11

describe a discretionary account

Answer 11

registered representative is a third party

Question 12

discretionary accounts must be approved by who and when?

Answer 12

by principal and before first trade

Question 13

describe UGMA

Answer 13

uniform gift to minors act

-reregistered in minor’s name at age 18

Question 14

describe UTMA

Answer 14

uniform transfers to minors act

-reregistered in minor’s name as late as age 25

Question 15

gift from grandfather to kid of 1,000,000

1. who pays gift tax?
2. who pays tax on earnings?
3. who prepares taxes?
4. what tax bracket is gift taxed?

Answer 15

1. grandfather
2. child
3. custodian
4. parents tax bracket

Question 16

what happens to a customers account if they die?

Answer 16

1. cancel open orders
2. mark the account deceased
   3/ await proper legal papers and instructions

Question 17

purpose of the SIPC?

Answer 17

industry funded insurance

-provides coverage to customer with assets held in brokerage firm who goes bankrupt

Question 18

describe coverage limits of SIPC

Answer 18

• $500,000 total (cash and securities)
• $250,000 cash total
• coverage per separate customer

Question 19

what is not covered by the SIPC

Answer 19

• commodities

- futures contracts

Question 20

what type of accounts are billed a single fee annually for a group of services?

Answer 20

wrap accounts

Question 21

what is the USA Patriot Act?

Answer 21

the federal legislation that requires broker/dealers to verify the identity of any person opening an account