UNIT 03.04-001 Flashcards
Your customer, Lane, has an individual account. For personal reasons Lane has legally changed their last name. What would your firm need to change the name on Lane’s account?
A letter of authorization (LOA) and evidence of the legal name change
This type of change is not uncommon. To change the name on the account, your firm would need a written authorization (LOA) and legal evidence of the change like a marriage certificate or a court order.
In an ACATs transfer the firm that HOLDS the assets BEFORE the transfer is called what?
Carrying firm
This is the carrying firm. The receiving firm receives the assets from the carrying firm.
A registered representative enters a discretionary order for her client’s account. All of the following are required except
A) the order should be included in those required to be reviewed frequently.
B) the order must be approved by a principal prior to entry.
C) a record of the order must be maintained.
D) the order must be identified as or marked discretionary.
B) the order must be approved by a principal PRIOR to entry.
Each discretionary order must be identified as such at the time it is entered for execution. A principal, officer or a partner of the broker-dealer must approve each order promptly and in writing, but NOT necessarily before order entry. A record must be kept of all transactions including discretionary ones. As with all trading activity, discretionary orders are subject to frequent and systematic review by a designated supervisor or manager.
A) the order should be included in those required to be reviewed frequently.
C) a record of the order must be maintained.
D) the order must be identified as or marked discretionary.
A customer will be leaving the country and asks his representative to watch his account. If his positions begin to decline in value, the registered representative should
talk to his manager.
The registered representative may only place an order if the account owner has granted him discretionary authority.
Paul is the grantor of the Lankford Family Revocable Living Trust. He would like to appoint his daughter, Heidi, as trustee. What forms are needed to do this?
Paul will need to submit a LETTER OF AUTHORIZATION (LOA) for the change, and Heidi will need to complete a NEW ACCOUNT FORM.
There is no change of ownership, so the account will remain the same. Because Paul is the grantor (and the trust is revocable), he may make this change. Heidi will need to complete a new account form to be able to manage the account.
A transfer of assets from an account at one firm to an account at a different firm begins with the completion of which of the following forms?
Transfer Initiation Form (TIF)
A TIF starts this process.
JOURNAL LETTERS are used for transfers WITHIN a broker-dealer.
An LOA is used for CHANGES to the account, NOT moving funds.
One of the differences between GRANTING DISCRETION and APPOINTING an investment adviser (IA) to an account is
DISCRETION is granted to _________,
but IA trading authority is granted to _________.
DISCRETION is granted to an INDIVIDUAL,
but IA trading authority is granted to the FIRM.
Discretion is granted to a specific representative of a BD firm; customers grant the IA firm the authority to manage the account. Both IAs and reps exercising discretion have a fiduciary duty to the customer.
Discretion given to a registered representative to make transactions applies to all of the following except
A) timing and price only.
B) whether to buy or sell.
C) the security for the transaction.
D) the number of shares or units for the transaction.
A) timing and price only.
Discretion is defined as the authority to decide what security, the number of shares or units, and whether to buy or sell. Discretion does not apply to decisions regarding only the timing of an investment or the price at which it is bought or sold.
Your customer would like to give their sibling the right to place trades and get account information for their account, but not withdraw funds. The best way for the customer to accomplish this is for
the customer to grant a limited power of attorney (LPOA) to the sibling for the account.
The LPOA would accomplish what the customer desires, granting the sibling trading authority without further access to the funds. An FPOA allows for withdrawing funds. The joint account makes the sibling a full owner, and the TOD does not provide trading authority or any other access to the account.
In an ACATs transfer the firm that will hold the assets AFTER the transfer is called
the receiving firm.
The firm that receives the assets is the receiving firm. It really is that simple.
