Series 7 practice questionmediumDiscretion and Account Supervision 4
A customer asks a representative to suspect financial exploitation of a senior investor. What is the best response?
- AThe representative must ignore the concern unless a court order exists
- BThe firm may place a temporary hold on disbursements if permitted by rule and firm policy✓ Correct answer
- COnly the transfer agent may delay the disbursement
- DThe account must be converted to discretionary status first
Explanation
Why B — The firm may place a temporary hold on disbursements if permitted by rule and firm policy
Discretionary activity is heavily supervised because it gives the representative authority to act without obtaining contemporaneous consent for every trade detail. FINRA rules allow limited same-day time and price discretion, but broader trading discretion requires proper written authorization and supervision.
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