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.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Prohibited Activities & Ethics questions
- A broker-dealer continually enters buy orders to artificially keep a stock’s price above a certain level. This practice…
- If a corporate insider gives confidential information to a friend who then trades on it, the friend is known as:
- An options trader receives material, non-public information about an upcoming FDA drug approval and purchases call…
- A wash sale for the purpose of market manipulation involves: