When a customer holds securities in street name, who is responsible for forwarding proxy materials to the beneficial owner?
- AThe issuing corporation
- BThe broker-dealer holding the securities✓ Correct answer
- CThe SEC
- DThe transfer agent
Why B — The broker-dealer holding the securities
When securities are held in street name (registered in the name of the broker-dealer), the broker-dealer is responsible for forwarding proxy materials and other corporate communications to the beneficial owners (customers). The broker-dealer must make every effort to forward these materials in a timely manner so that customers can exercise their voting rights. Under NYSE and FINRA rules, broker-dealers must also inquire whether customers wish to receive proxy materials and must vote shares only as directed by the beneficial owner on non-routine matters.
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
- A large broker-dealer executes thousands of trades per day with multiple counterparties. What is the primary function…
- A corporation issues rights to its existing shareholders to purchase additional shares at $30 per share. The stock is…
- Which statement is TRUE regarding order types?
- Company A makes a tender offer to purchase all outstanding shares of Company B at $50 per share, a 25% premium over the…
- Which statement is TRUE regarding settlement and confirmations?
- A customer owns 300 shares of QRS stock at $60 per share. The company declares a 10% stock dividend. What is the…
- Which statement is TRUE regarding trade reporting and books?
- A company announces a 1-for-5 reverse stock split. A shareholder who owns 500 shares at $2 per share will have what…