Unit 1- Types Of Accounts Flashcards
Define: Pattern Day Trader
Day Trader = Buying and selling the same security on the same day.
Pattern Day Trader = Executes 4 day trades in a 5 business day window.
Minimum account equity to pattern day trade?
$25,000
Two member firm requirements to open a day trading account?
- Risk disclosed document must be provided.
- Account approval for day trading, OR written statement from customer saying they don’t intent to day trade.
Which account registration type requires the % interest of each party on the account be specified?
Tenants In Common
Can a TIC account have a TOD designation?
No.
Define: Sole Proprietorship
- Simplest business account.
- Is treated like an individual account (including suitability).
- Income/loss is that of the individual.
- Individual’s assets are liable for the debts of the business.
Define: General Partnership
- An unincorporated association
- Easy to form/dissolve
- Not suited for raising capital.
- Profits/losses flow through to the individual partners .
- Can be double taxed (business and individual level).
- Suitability must consider all partners.
Define: General Partnership
- An unincorporated association
- Easy to form/dissolve
- Not suited for raising capital.
- Profits/losses flow through to the individual partners .
- Can be double taxed (business and individual level).
- Suitability must consider all partners.
Define: Limited Partnership
- Liability is that of the general partners.
- Limited partner’s liability is that of their investment and recourse debt.
- Suitability includes all parties.
Define: Limited Liability Company
- Combines incorporation (limited liability) with tax advantages of a partnership (flow through of taxable gains/losses).
- LLC owners are members, not shareholders.
- Each individual must be considered from a suitability standpoint.
Define: S Corporation
- Profit/losses are passed through to the shareholders.
- Limited to 100 or less shareholders.
- Shareholders can NOT be nonresident aliens.
- Only one class of stock can be issued.
Define: C Corporation
- Distinguishes the company as a separate entity from the ownership.
- Leaders and mangers are shielded from personal liability.
- Is a good choice for raising large capital.
- Shareholders are shielded from corporate creditors.
- Corporate income tax is owed by the company, not the shareholders.
- Suitability is determined by the attributes of the corporation, not the owners.
- Note: Earnings can be double taxed (corporate tax + tax on dividend distributions)
What info is on the New Account Form?
- Customers name and address.
- Age
- Member firm’s associated person responsible for the account.
- If a business account, the names of the people authorized to transact in the account.
- Signature of form officer accepting the account.
- Trusted Persons name and contact info.
- NOTE: customers signage is NOT required.
Account information delivery requirements when opening a new account?
- Within 30 days of opening
AND
- Every 36 months thereafter
Information required under CIP?
- Name
- Date of birth
- Address
- SS # or business tax id
When opening an account, special procedures apply to?
- Employee of member for a
- Souses and minor children of member form employees.
Requirements for a member ferm employee to open an account at another firm?
- Member must inform both the employer and contractor firm of their association, in writing.
- Employer must grant permission in writing.
- NOTE: Members are excluded if they are purchasing mutual funds or variable annuities from the issuer directly. Also excludes non-security purchases.
Length of time a member firm can place a hold on distributions from a specified adult?
Up to 55 days
Under Regulation S-P, how long for a customer have to opt out when the receive a privacy notice?
30 days
Under Regulation S-P, when does a customer receive a privacy police notice?
At the opening of EACH account, and annually thereafter.
Define: Full Power Of Attorney
- Can deposit/withdraw cash and securities.
- Can make investment decisions
Define: Limited Power Of Attorney
- Only allows buy/sell orders.
-Note: sometimes called “limited trade authorization.”
Does durable power of attorney extend beyond death?
No, only physical and mental incompetence
Are non-qualified plans covered by ERISA?
No
