Series 63 practice questionhardProhibited Practice: Unauthorized Trading
An agent executes trades in a client’s account without written authority and without discussing the trades with the client. Under the USA, this is:
- APermitted if the trades are profitable
- BA prohibited practice, regardless of outcome✓ Correct answer
- CPermitted for discretionary accounts
- DOnly a violation if the client files a complaint
Explanation
Why B — A prohibited practice, regardless of outcome
Executing trades without proper authority is a prohibited practice under USA Section 501, regardless of profit. Profitability (A), discretionary status without written authority (C), or complaint (D) do not justify the action.
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