Unit 5- Customer Accounts

Question 1

New Account Form

Answer 1

Personal Info of Customer filled out by registered representative

• includes (occupation, income/networth, investment objectives, brokerage references, employee of another broker/dealer, how account was acquired)
• Signature of Principal/Branch manager (not signature of registered representative or Customer
• REQUIRED BY FINRA

Question 2

USA PATRIOT ACT of 2001

Answer 2

designed to detect and prevent money laundering and financing of terrorism

Question 3

CIPs

Answer 3

Customer Identification Programs
- keep records of identification, which are checked against Specially Designated Nationals (SDN list) maintained by Foreign Asset Control

Question 4

SDN

Answer 4

Specially Designated Nationals (list of suspects)

Question 5

OFAC

Answer 5

Office of Foreign Assets Control
- maintains the SDN which includes individuals and companies owned/controlled/acting in interest of targeted countries or individuals

Question 6

Regulation S-P

Answer 6

enacted by SEC
- FIRM must provide privacy notice to customers when new account is opened.
IF FIRM HAS RIGHT TO DISCLOSE PRIVATE INFO to 3rd Parties, must provide customers with a reasonable means to opt-out of this disclosure

Question 7

Trading Authorization/Power of Attorney

Answer 7

someone other than owner having authority to buy/sell securities on behalf of owner

Question 8

Discretionary

Answer 8

registered representative or other person who has written authorization from customer

Question 9

Custodial

Answer 9

an adult designated to act on behalf of minor, who is the beneficial owner of the account

Question 10

Fiduciary

Answer 10

3rd party who is legally appointed to prudently manage the account on behalf of another person/entity

Question 11

Transfer & Ship

Answer 11

securities registered in customer’s name and shipped to them

Question 12

Transfer and hold in safekeeping

Answer 12

securities registered in customers name, held by broker/dealer in safekeeping

Question 13

Hold in Street Name

Answer 13

Registered in broker/dealer name and held by broker/dealer. Customer is the beneficial owner

Question 14

Delivery Versus Payment (DVP)

Answer 14

securities are delivered to bank or depository against payment.

**USED FOR INSTITUTIONAL ACCOUNTS

Question 15

Direct Registration System

Answer 15

• option to hold assets in book-entry form

- service by DTC (Depository Trust Company)

Question 16

Cash Accounts

Answer 16

customer pays in full for any securities

Question 17

What type of accounts must be cash accounts

Answer 17

personal and corporate retirement accounts and custodial accounts

Question 18

When you join a firm as employee, who must you notify of existing accounts?

Answer 18

Both the employer firm and the account firm in written form

Question 19

In joint accounts, does mail need to be sent to both parties?

Answer 19

No

Question 20

What if client wants to make an unsuitable investment?

Answer 20

Place order BUT mark as unsolicited (ORDER DOES NOT NEED TO BE PUT INTO WRITTEN FORM)

Question 21

What paperwork is needed for a guardian account

Answer 21

copy of court order guardianship

Question 22

If a son has durable PoA over mother and he dies, what happens?

Answer 22

the PoA expires

Question 23

If paper work is “in the mail”/pending approval for discretionary account, under any circumstances can a discretionary order be made?

Answer 23

NO

Question 24

Can PO box be used as a mailing address?

Answer 24

No unless it is attached to a physical address

Question 25

In custodial account, what should be done with cash dividend

Answer 25

They can sit for short period of time in anticipation of reinvestmnet