SIE practice questionmediumAccount Types - Prohibited Practices
Which is an example of a prohibited practice relating to custodial accounts?
- AReinvesting dividends in the same mutual fund
- BUsing assets for the custodian’s personal benefit✓ Correct answer
- CRestricting trades to stocks and bonds
- DReporting gains to the IRS
Explanation
Why B — Using assets for the custodian’s personal benefit
It is illegal for a custodian to use custodial assets for personal gain. Reinvestment, trading limitation, and tax reporting are acceptable practices.
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