Series 63 practice questioneasyProhibited Practices — Commingling Funds
A broker-dealer deposits a customer's funds into the firm's general operating account. This is an example of:
- AProper cash management
- BCommingling of funds, which is prohibited✓ Correct answer
- CA temporary deposit pending investment
- DAn authorized sweep arrangement
Explanation
Why B — Commingling of funds, which is prohibited
Under NASAA model rules and USA Section 502, commingling customer funds with a broker-dealer's own funds is a prohibited practice. Customer funds must be maintained in separate accounts to protect them from the firm's creditors and to ensure proper accounting. Mixing customer and firm funds creates significant risks of misuse and loss.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,051+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Regulation of Broker-Dealers & Agents questions
- Agent Kelly recommends that a 78-year-old retired widow invest her entire life savings in speculative penny stocks.…
- An agent borrows $5,000 from a customer to pay personal expenses. Under the USA, this practice is:
- Agent Robert guarantees a new client that her $100,000 investment will grow to at least $150,000 within one year. When…
- Under what circumstances may an agent share in the profits or losses of a customer's account?
- An agent learns that a publicly traded company is about to announce a major merger. Before the announcement, the agent…
- Agent Mike sells interests in a private real estate fund to his brokerage clients without informing his employing…
- Agent Priya opens a joint investment account with her customer, Mrs. Chen. Priya contributes 20% of the capital but…
- An agent executes a trade in a customer's account without the customer's prior knowledge or authorization and without…