Customer Accounts--Documentation Flashcards
True or False: SIPC provides coverage for both commodities and futures accounts.
False
Name some of the different items found on a customer confirmation. 7
- Description,
- amount,
- purchase/sale,
- execution price,
- trade/settlement date,
- BD capacity,
- commission (on agency)
When do gifts become the property of the minor in a custodial account?
When gifted
Only ______ custodian is allowed per minor’s account.
Only one custodian is allowed per minor’s account.
True or False: Only one person must provide information to open a joint account.
False. Each owner must provide information to open a joint account.
True or False: Gifts made to minors are irrevocable.
True
The ___________________ must sign the account form.
The supervising principal must sign the account form (clients are not required to sign).
What age must be attained for the minor to gain control over his account?
Age of majority
Is discretionary authorization required to enter a not held order?
No, since discretion is limited to time and/or price for not held orders.
Based on written request, what is the maximum period that a B/D may hold customer correspondence?
Three months. To exceed three months, the customer must provide the B/D with a valid reason for the request.
What program must be established by BDs to verify the identity of each customer opening an account?
Customer Identification Program (CIP)
Does SIPC protect separate customers or separate accounts?
Separate customers. A customer with both a cash and margin account with a BD would be covered once.
What happens to the deceased’s portion in a joint account with tenants-in-common?
The deceased’s portion goes to his estate for tax purposes.
Who notifies customers of BD bankruptcy?
The trustee handling the liquidation
True or False: Jim’s joint account with his wife is considered a separate customer by SIPC.
True. E.g. Jim’s cash and margin account are combined for coverage, but Jim’s joint account with his spouse is separate.
SIPC provides coverage of $_________ of which no more than $_________ can be cash.
SIPC provides coverage of $500,000 of which no more than $250,000 can be cash.
What steps should be taken when an RR executes a trade but uses the wrong account number?
Do a cancel and re-bill. Transfer the trade to the correct account number with permission of a supervising principal.
For how long may a not held order be maintained?
A not held order is considered a day order.
True or False: Custodial accounts are solely carried in the name of the minor.
False. The account is in the custodian’s name for the benefit of the minor.
_____________________________ protects customers from BD bankruptcy.
Securities Investor Protection Corporation (SIPC) protects customers from BD bankruptcy.
Custodians have a ____________ duty to do what is best for the minor.
Custodians have a fiduciary duty to do what is best for the minor.
True or False: Clients need not sign the account form for a cash account.
True, but signature would be required for an option or a margin account.
What will SIPC cover in a customer’s margin account?
Only the customer’s equity (securities clear of any outstanding loan)
Identify the acronym: CTR
Currency Transaction Report
Based on written instructions, a B/D may hold customer correspondence for _____ months.
Based on written instructions, a B/D may hold customer correspondence for three months.
True or False: Names appearing on the OFAC List are customers who had a previous business relationship with the firm.
False. The list shows the names of suspected terrorists and criminals.
Both the ____________ and the ____________ are required for a corporation to open an options or margin account.
Both the Corporate Resolution and Corporate Charter are required for a corporation to open an options or margin account.
For active accounts, account statements must be sent ____________.
For active accounts, account statements must be sent monthly.
The _________ is responsible for taxes on income in a custodial account.
The minor is responsible for taxes on income in a custodial account.
What list must be checked to identify suspected terrorists and criminals?
OFAC List (Treasury Department’s Office of Foreign Assets Control)
True or False: All corporate officers may effect transactions for the corporation.
False, only those named in the Corporate Resolution
May a custodian make speculative investments in a minor’s account?
Yes, provided they are suitable based on the objectives.
RRs must examine what document to open any corporate account?
Corporate Resolution
Regulation S-P requires clients be provided with a ______________ detailing how BDs handle personal client information.
Regulation S-P requires clients be provided with a Privacy Notice detailing how BDs handle personal client information.
True or False: Money may be withdrawn from a joint account in one owner’s name.
False. Any checks should be in both parties’ names.
What may an RR do with full discretion, but not with limited discretion?
Withdraw money from the account
What triggers a BD’s filing of a Currency and Monetary Instrument Report (CMIR)?
When anyone physically transports or receives cash (or equivalents) exceeding $10,000 into, or out of, the U.S.
A ___________________ is required to open an account for a partnership.
A Partnership Agreement is required to open an account for a partnership.
What regulation protects the non-public personal information of customers?
Regulation S-P
Account statements must be sent to customers at least ____________.
Account statements must be sent to customers at least quarterly.
True or False: Principals must approve discretionary orders prior to entry.
False. The orders must be approved promptly afterward.
What triggers a BD’s filing of a Suspicious Activity Report (SAR)?
Any suspicious transactions of $5,000 or more
What steps are taken if a customer dies?
Mark the account “deceased,” cancel open orders, and await instructions.
What three items must be specified on a not held order?
Action (buy/sell), Amount (quantity), and Asset (security)
Is margin permitted in a minor’s account?
No, securities must be fully paid.
If a BD goes bankrupt, what happens to securities registered in the customer’s name?
They are returned to the customer without regard to SIPC limitations.
What is a TOD account?
An account in one person’s name that allows a beneficiary to gain control upon the account holder’s death.
May a wife enter trades in a husband’s account?
Yes, with written third-party authorization.
What triggers a BD’s filing of a Currency Transaction Report (CTR)?
Any cash transaction executed by a customer during one day that exceeds $10,000
What items are acceptable as proof of identity under the Customer Identification Program (CIP)?
Passport or driver’s license (both have a picture)
What happens to the deceased’s portion in a joint account with right of survivorship?
Her portion passes to the survivor.
For a joint account, how many account numbers and SSNs are used for tax reporting?
One
Describe a wrap account.
An account that charges the client a single fee that covers transaction execution and account management
True or False: Not held orders may only be executed in a discretionary account.
False. Discretionary power of attorney is not required.
Who may enter orders in a joint account?
Any owner named on the account
What is needed to exercise discretion over a client’s account?
Written power of attorney
Custodial accounts are opened under whose Social Security number?
The minor’s
Customers become ___________________ if their cash or securities positions exceed SIPC coverage.
Customers become general creditors if their cash or securities positions exceed SIPC coverage.
