SIE practice questionmediumProhibited Activities - Unauthorized Trading
A rep executes a trade in a margin account without proper authorization and later claims the client verbally approved. According to FINRA, this is:
- AAllowed in margin accounts only
- BPermissible for experienced clients
- CA prohibited practice unless written authorization exists✓ Correct answer
- DRequired following market news
Explanation
Why C — A prohibited practice unless written authorization exists
Trading without written discretionary authority is prohibited, regardless of account type or client’s experience. Verbal approval does not suffice.
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