Series 63 practice questionmediumProhibited Practices — Sharing in Customer Accounts
On a timed state-securities quiz, the scenario below appears. Treat the facts as a straight Series 63 application question. 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. The governing USA principle is unchanged even though the framing is different.
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