Series 63 practice questionmediumProhibited Practices — Sharing in Customer Accounts
On a timed state-securities quiz, the scenario below appears. Assume the administrator is testing the cleanest state-law answer. Under what circumstances may an agent share in the profits or losses of a customer's account?
- AWhen the customer verbally agrees to the arrangement
- BWhen the agent has obtained written authorization from the customer and the broker-dealer, and shares proportionally to the agent's financial contribution✓ Correct answer
- CWhen the agent guarantees the customer against any losses
- DUnder no circumstances may an agent share in a customer's account
Explanation
Why B — When the agent has obtained written authorization from the customer and the broker-dealer, and shares proportionally to the agent's financial contribution
Under NASAA model rules on dishonest or unethical business practices, an agent may share in the profits or losses of a customer's account only with written authorization from both the customer and the employing broker-dealer, and the sharing must be proportionate to the agent's financial contribution to the account. Disproportionate sharing arrangements are prohibited. This version tests the same concept with a different fact pattern wrapper.
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