New Accounts, Financial Profiles, and Investment Objectives Flashcards
Pattern Day Traders conduct at least … trades within a … -day period and need to have at least … of equities in their account
4 trades within a 5-day period and need to have at least $25k of equities in their account
Prime brokers provide … and … for hedge funds
Custody and Financing
DVP
Delivery Versus Payment - institutional investor has up to 35 calendar days to provide securities that were paid for
JTWROS vs. JTIC
Joint Tenants With Rights Of Survivorship - decedent’s share goes to the surviving party
Joint Tenants In Common - decendent’s share goes to their estate or beneficiary
When opening a customer account, required items are…
Picture ID, Physical Address, Principal Approval, whether the customer and/or immediate family member works at another BD Firm
Rollover IRAs must be conducted within…
60 days of liquidation
Eligibility of a pension plan
At least 21 years-old and at least 1,000 hours of employment
True or False: Qualified (Retirement) Plans provide after-tax cost basis
False: 0 cost basis that is pre-tax
(remember: Qualified = You are good to go = start fresh!)
True or False: Unqualified (Retirement) Plans provide after-tax cost basis
True
In a Defined Benefit Plan, the … assumes the investment risk
Employer
(remember: the ONE PROVIDING BENEFIT assumes the liabaility)
In a Defined Contribution Plan, the … assumes the investment risk
Employee
(remember: the CONTRIBUTOR assumes the liability)
Step Up (for inheritance)
When someone dies, the cost basis “steps up” in cost basis
Control Persons
Anyone who is able to influence decisions of corporations and their immediate family members
(ie. Officers, Directors, Principal Stock Holders)
What kind of stock do Control Persons hold?
Control Stock
(remember: Control = Control)
Principal Stock Holder needs to hold at least … of stock
10%
Regulation SP
BDs need to make sure that they are protecting customer information
BDs require…
1) Permission from customer to solicit information
2) Required to make it easy for the customer to opt out
(remember: SP = SAFE PRACTICE!!!)
POA
Power of Attorney - also known as Trading Authorization
Allows other people to make investment decisions for you
Limited Power vs. Full Power POAs
Limited Power: Able to conduct Action (buy/sell), pick Assets, and state the Amount
(remember: AAA)
Full Power: Able to do all Limited Power + withdraw monies and securities
Opening a Trust Account requires a…
Trust Agreement
Opening a Corporate Account requires a…
Corporate Resolution
If Margin: requires Corporate Charter
True or False: Paperwork when opening an account is required prior to the first trade after principal approval
True
During KYC, best practice is to obtain the client’s…
(Personal) Balance Sheet
(remember: need to know your money situation before I can help you)
Balance Sheets should include…
Current and LT Assets, Current and LT Liabilites, Net Worth, Current Income/Income Statement
(bonus: Look for Accredited Investor status within Net Worth and Current Income: $1MM Net Worth and/or $200k/yr for 2 years or $300k/yr for married couples filing jointly)
True or False: You only need Principal approval when opening certain kinds of accounts
False: You always need Principal approval when opening any type of account
WSP
Written Supervisory Procedure - procedures that state protocol and rules
WSP states that you must close accounts when the client’s … cannot be verified
Identity
(remember: If you can’t be ID’d, you can’t have an account)
To protect seniors … years and older, WSP states that senior customers must have a … on file
65 years and older … Trust Contact on file
