Customer Accounts and Suitability Flashcards
6 cards from real SIE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Customer Accounts and Suitability flashcards as text
Reg BI (Regulation Best Interest) requires broker-dealers to:
Answer: Act in the best interest of retail customers when making recommendations
Reg BI requires broker-dealers to place retail customers' best interests first when making investment recommendations.
A tenants in common (TIC) account differs from JTWROS in that:
Answer: Each TIC owner's share passes to their estate upon death, not to co-owners
In a TIC account, each owner's interest passes to their heirs through their estate, unlike JTWROS where it passes automatically to survivors.
What information is required on a new account form under FINRA rules?
Answer: Customer's name, address, tax ID, investment objectives, financial situation, and risk tolerance
FINRA requires firms to collect comprehensive customer information including personal details, financial profile, and investment objectives for suitability purposes.
A churning violation occurs when a broker:
Answer: Excessively trades a customer's account primarily to generate commissions
Churning is the unethical practice of excessive trading in a customer's account primarily to generate commissions for the broker.
What must occur before a broker-dealer executes an options trade in a customer's account?
Answer: Options agreement must be signed and account must be approved for options trading
Options accounts require separate approval based on the customer's financial profile, and a signed options agreement before trading.
Under the Bank Secrecy Act, currency transaction reports (CTRs) must be filed for cash transactions exceeding:
Answer: $10,000
Financial institutions must file a CTR for any single cash transaction or series of related transactions exceeding $10,000.