Series 63, Unit 4

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Margin account

Type of account required for short selling

entanglement

A firm or its personnel is entangled with the preparation of a third party post

interactive content

Content published on social media that allows for others to comment, reuse, or like... constantly changing

USA Patriot Act of 2001

Determines if they are a terrorists

needs customer signature

Discretionary authority (full or partial POA)

annually

How often must a risk disclosure document be provided to margin customers?

10 business days after initial trade

In the case of of IA, when must written forms be received for account activity?

Discretionary account with a BD

No trading may take place in what kind of account before the signed authorization form as been received?

optional loan consent form

Usually for short sales, agree to give permission for the firm to loan customer margin securities to other customers or BD

under Model Rule for IA contracts

Waivers are not permitted

promises of high returns with no risk, offshore operations, e-currency sites, recruit friends, professional websites with little to no information, no written information, testimonials from other group members

What are some online red flags for investors?

credit agreement, hypothecation agreement, optional loan consent form

What are the three agreements required for margin accounts?

transfer and ship, safekeeping, street name

What are types of payment and delivery instructions?

testimonials

What can BD use for advertising that is strictly prohibited for IA?

Either action, asset, or amount

What does the RR have to decide in a discretionary account?

1. cancel all open orders 2. mark account deceased 3. freeze assets until receiving proper papers

What happens when an client dies?

name, DOB, occupation, address and phone number, tax ID #, citizenship, annual income and net-worth, bank and brokerage reference, how the account was acquired, PRINCIPAL signature

What is FINRA required information for opening a new account?

Commissions, markups and markdowns, advisory fees

What is not included in the fee disclosure documents?

get prior approval of principal

What is the first thing you want to do before opening a discretionary account?

They must be in writing and disclose term of contract, advisory fee, fee formula, prepaid fee, discretionary power.

What must investment advisory contracts include?

The capacity of the BD and the amount of commission charged

What must trade confirmations always include?

adoption

When a BD explicitly or implicitly endorses or approves the content posted by a third party

at or before account approval

When must customers who wish to trade options must receive a copy of the Options Disclosure Document?

promptly after initial trade

When must documentation be received for margin accounts?

within 15 days

When must documentation for options be received?

No later than completion of the trade (Settlement date)

When must trade confirmation be sent?

In those uncommon cases where an investment adviser acts in the capacity of a principal (or agent) with an advisory client

When would consent of the client before completion of the trade made between the firm and a client be required?

Credit agreement

discloses terms of the credit extended by the brokerdealer, including the method of interest computation and situations under which interest rates may change

Status content

fixed content untill the author makes a change

Hypothecation agreement

to pledge securities as collateral for loan you are taking out


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