Series 63 practice questionmediumUnauthorized Trading
A client of a registered agent in State Q gives verbal permission to buy 500 shares of a specific stock. The agent executes the trade. Which statement is TRUE under the USA?
- AVerbal approval is sufficient for this transaction✓ Correct answer
- BWritten discretionary authority is required for this trade
- CThis is churning since it may generate commissions
- DThe agent must also receive written approval from the Administrator
Explanation
Why A — Verbal approval is sufficient for this transaction
If the client specifies the action (buy), asset (the stock), and amount (500 shares), verbal approval is sufficient. Written discretionary authority is only required if the agent chooses action, asset, or amount (USA Section 402).
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