Which of the following qualifies as a broker-dealer:
Answer(s): C
The definition of a broker-dealer includes any person in the business of transacting securities for his or her own account or the account(s) of others. The definition does NOT include: issuers (Big 3 Corporation), agents of broker-dealers (Melissa Favre) or banks (Jackson Bank and Trust)
Jack Snowdon's client, Mr Seeborn, is interested in a new satellite radio stock but wants to hold off for a week. Jack thinks he should buy now and tells Mr Seeborn that the stock will pay a dividend this week and Seeborn should not wait. Has Jack acted in his client's best interests?
Answer(s): A
Snowdon has acted fraudulently by attempting to get Seeborn to buy now because a dividend will be paid. In essence, a dividend is already included in the price of a security and typically drops to a lower price on the ex-dividend date. By purchasing now, and receiving a dividend, Snowdon is actually receiving his own money back in the form of a taxable dividend
Which of the following does NOT require compensation disclosure in regards to wrap fee programs?
Wrap fee programs require special disclosures to clients. The fact that wrap fee programs carry a certain amount of risk must be disclosed; the remaining choices are required disclosures in regards to compensation. Because a client pays a specified fee as opposed to per-transaction costs, wrap fee program can be a cost-efficient way to trade in an account and to obtain portfolio management and advisory services. Furthermore, this type of account protects an investor from a broker-dealer who may over-trade in the account in order to generate commissions
The SEC has the power to suspend trading on an exchange:
The Securities and Exchange Commission is empowered to suspend trading on one of the exchanges for up to 90 days if the President of the United States has been previously notified
Frank Osborn is an agent for Skyz Unlimited Ltd. A beloved client, Mrs Loolahy, gave Frank power of attorney to manage the investment activity in her account. Because Skyz Unlimited has custody of Mrs Loolahy''s securities, how often will the broker- dealer need to report to her on account transactions?
On a quarterly basis, an investment advisor with custody of client funds must provide an itemized statement of all transactions in the account. The document must also detail all funds and securities within the account
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