Series 63 practice questioneasyUnauthorized Trading
An agent at a broker-dealer executes a trade in a client’s account without prior written authorization. This is considered:
- APermitted if the agent believes it's in the client's best interest
- BProhibited unless the agent has discretionary authority✓ Correct answer
- CAllowed as long as the trade is profitable
- DAllowed with oral authorization post-trade
Explanation
Why B — Prohibited unless the agent has discretionary authority
Executing trades without prior written discretionary authority is a prohibited practice under USA Section 402. Oral or after-the-fact authorization does not suffice.
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