Series 63 practice questioneasyProhibited Practices — Borrowing/Lending
A training manager asks you to analyze the following USA issue. Assume the administrator is testing the cleanest state-law answer. An agent borrows $5,000 from a customer to pay personal expenses. Under the USA, this practice is:
- APermitted if the agent repays the loan within 30 days
- BPermitted if the customer is a family member
- CPermitted as long as a written loan agreement exists
- DGenerally prohibited as a dishonest or unethical business practice✓ Correct answer
Explanation
Why D — Generally prohibited as a dishonest or unethical business practice
Under NASAA's Statement of Policy on Dishonest or Unethical Business Practices, borrowing money or securities from a customer is generally prohibited. Limited exceptions may exist for customers who are family members or lending institutions, but borrowing from a customer for personal expenses is a clear violation of ethical standards. The exam trick is the framing, not the underlying Uniform Securities Act rule.
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