Series 63, Unit 4
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
