Series 79 practice questionhardSupervision Requirements
A branch manager fails to monitor an employee who repeatedly violates firm policy by executing unauthorized trades. What is the manager’s potential regulatory exposure?
- ANone, unless the manager personally benefited
- BPossible disciplinary action for failure to supervise✓ Correct answer
- CAutomatic termination by FINRA
- DImmunity if the violations were unintentional
Explanation
Why B — Possible disciplinary action for failure to supervise
Managers can be held liable for failure to supervise, regardless of personal benefit. The trap is assuming only direct involvement or intent triggers supervisory liability.
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