UNIT 03.04-002 Flashcards
A carrying firm that does not have an exception to transfer instructions has how long to validate the transfer?
One business day
A carrying firm has one business day to validate a transfer request or take exception to the transfer.
Discretionary authority is not required for a registered representative to choose which of the following order instructions?
Time of execution
Price of execution
If a registered representative chooses price or timing of an order only, that order is not a discretionary order and a power of attorney is not required. The order is a not held order.
To be discretionary, the representative must choose one or more of the following: the ACTION (buy or sell), the security, or the AMOUNT (number of shares).
A transfer of assets between accounts at different firms generally takes place through which of the following systems?
Automated Customer Transfer System (ACATs)
Most transfers of this type will go through the ACATs system. We refer to this type of transfer as a TOA, but that is not the system name. Clearing corporations may handle some of the work, but the system is called ACATs. The NYSE doesn’t do this.
Lando Entertainment Corporation has undergone a change of the corporation’s name. What forms are needed to reflect this name change on the company’s account?
A letter of authorization from the board is needed to make the change.
The ownership (and tax ID) do not change. A letter from the board authorizing the change is all that is needed.
Tate and Sidney have a joint tenants account with your firm. The account is under Tate’s Social Security number. In order to bring the assets under Sidney’s Social Security number, what forms will the firm require?
They will need to open a new joint account and both authorize a journal transfer to the new account.
They will need to open a new joint account and then both authorize the transfer.
A registered representative is explaining discretionary and nondiscretionary accounts to a customer. Only one of the following statements is accurate and can be made by the registered representative. Which is it?
In a nondiscretionary account no order can be entered without your prior approval.
In a nondiscretionary account, no order can be entered without the customer’s prior approval. In a discretionary account the customer’s prior approval is not required. Only the customer can decide if the account should be a discretionary one and grants that discretion with a limited power of attorney giving trading authorization to the registered representative. Even in a discretionary account the customer may still enter their own orders.
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The key to understanding this question lies in grasping the difference between discretionary and nondiscretionary accounts, and what permissions and limitations apply to each. Let’s break down these concepts:
- Nondiscretionary Account: This type of account requires that any trades or transactions must receive the client’s explicit approval before they can be executed. Think of it like a parent needing to give their teenager permission each time they want to use the family car. Every single outing requires approval.
- Discretionary Account: In contrast, once a client gives initial permission (through a limited power of attorney), the registered representative can make trades and investment decisions on the client’s behalf without needing to ask for approval for each transaction. It’s akin to giving the teenager their own set of car keys and the freedom to use the car as they see fit, within certain pre-agreed rules.
Morgan and Mackenzie have a joint tenants account with your firm. The account is under Morgan’s Social Security number. In order to bring the assets under Mackenzie’s Social Security number, what forms will the firm require?
They will need to open a new joint account and both authorize a journal transfer to the new account.
They will need to open a new joint account and then both authorize the transfer.
A type of power of attorney (POA) that continues to be in force if the grantor becomes incapacitated is called
durable power of attorney.
A POA must have durable powers in order to survive the incapacity of the grantor. A trustee manages a trust. A guardian may be appointed to take care of the affairs of a person who is already incapacitated.
Your customer, Lane, has recently married and would like to add their spouse as a joint tenant to their brokerage account. What documents will your firm need to fulfill this request?
Letter of Authorization from Lane adding their spouse to the account
New account form completed by Lane’s spouse
Lane would need to sign an LOA to add the new spouse, and the spouse would need to complete a new account form.
After receiving the transfer initiation form (TIF) from a broker-dealer, how long after validating the securities on the form does the carrying firm have to complete the transfer?
three business days
When a carrying firm receives the TIF from a broker-dealer that requests a transfer of securities to their firm, the carrying firm has one business day to validate the information on the form, and then three business days after validation to complete the transfer.
