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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardAgent Registration — Scenario

David is a registered agent with Broker-Dealer Alpha. Without notifying Alpha, David opens a personal account at Broker-Dealer Beta and begins executing his own trades there. Under the USA, David has:

  1. ADone nothing wrong because the trades are for his personal account
  2. BViolated the USA only if he lost money on the trades
  3. CViolated the USA because he failed to provide written notice to his employing broker-dealer about the outside account✓ Correct answer
  4. DActed properly as long as he reports the trades on his tax return
Explanation

Why C — Violated the USA because he failed to provide written notice to his employing broker-dealer about the outside account

Under state securities regulations and NASAA model rules, a registered agent must provide written notice to their employing broker-dealer before opening accounts at other firms. Failing to disclose outside brokerage accounts violates the duty of disclosure owed to the employing firm, regardless of whether the trades are profitable or personal in nature.

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