SIE Customer Accounts

SIE Customer Accounts

by Roy Ramirez

Multiple Choice

A woman in the 15% tax bracket wishes to buy a municipal bond. The registered representative tells her that such an investment is not appropriate. The registered representative can execute the trade:

• if the principal approves

• if the manager approves

• under no circumstances

• at the specific direction of the customer

​Under an MSRB interpretation, if a customer directs a registered representative to do a trade that the representative believes is inappropriate, the representative must inform the customer of his or her objections; and if the customer still directs that the trade be performed, then the representative must execute the trade. We call this the MSRB "Do It!" rule.

Multiple Choice

TOD account registration stands for:

• Taco of the Day

• Transfer on Disability of customer

• Transfer on Death of customer

• Transfer on Direction of customer

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​Transfer On Death is a type of account registration that allows the registered owner to name the person into whose name the securities will be transferred upon the death of the customer. Thus, the securities are not required to be transferred into the name of the estate; and then retransferred to the beneficiary; after the estate clears probate.

Multiple Choice

To prevent financial exploitation of seniors, FINRA requires that when opening an account for a client, reasonable efforts must be made to obtain the name, phone number, and mailing or e-mail address of a(n):

• close relative of the client

• trusted contact person

• attorney for the client

• fiduciary for the client

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​To address growing problems with financial exploitation of vulnerable senior citizens, FINRA requires that "reasonable efforts" be made to obtain the name and contact information of a "trusted contact person" when an account is being opened. Note that this requirement applies to any new account, not just to accounts opened by senior citizens (age 65 or older).

Multiple Choice

Under FINRA rules, a registered representative must obtain and retain all of the following information relating to the customer's account EXCEPT:

• Customer Physical Address

• Country of Citizenship

• Financial Status

• Customer Email Address

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​FINRA rules require that a registered representative obtain a customer's name and address (makes sense!)

Country of citizenship is required as well, since if the customer is a non-U.S. citizen, a copy of the customer's passport must be obtained and the customer must have a U.S. tax identification number.

Customer financial information must be obtained to perform a suitability determination under the requirements of the "Know Your Customer" rule.

An e-mail address would be helpful but it's not required.

Multiple Choice

How must an account opened under the Uniform Gifts to Minors Act be titled?

• In the name of the custodian only

• In the name of the minor only

• In the name of the custodian for the minor

• In the name of the minor for the custodian

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​Under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA), any adult can open a custodial account for any minor. The account must be titled in the name of the custodian for the minor - so both names are there.

Also note that the social security number of the minor is used on the account, not the social security number of the custodian.

Multiple Choice

Which of the following customer actions could be an indicator of money laundering?

• Depositing $50,000 of registered stock into the account and directing that it be transferred into street name

• Buying a security in advance of the ex date and selling after the record date in order to receive a cash dividend

• Buying and selling the same security over a short period of time, incurring significant commission costs

• Buying a security and selling short an equivalent convertible security to lock in a price difference