Series 63 practice questionmediumUnauthorized Trading
A client asks her agent to 'pick an appropriate stock' and buy shares on her behalf, but does not specify which stock or how many shares. The agent proceeds to make the purchase. Under the USA, this is:
- APermitted if the agent has oral authority
- BUnauthorized trading unless written discretionary authority is on file✓ Correct answer
- CAcceptable if the trade is in the client’s best interest
- DAllowed if the agent’s supervisor later approves the trade
Explanation
Why B — Unauthorized trading unless written discretionary authority is on file
Unless the agent has written discretionary authority, selecting the security and amount is unauthorized trading (USA Section 402). Client intent or supervisor approval after the fact does not suffice.
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