General Securities Sales Supervisor (Series10) Practice Exam

Under FINRA rules, what action must an executing member take when a person associated with a member firm opens an account at another member?

1. A Notify the employer member prior to execution of any transactions

2. B Notify the person that the employer will be notified

3. C Send duplicate trade confirmations upon request

4. D All of the above

The correct answer is: D All of the above

When a person associated with a member firm opens an account at another member firm, several actions are mandated under FINRA rules to ensure transparency and maintain compliance. The requirement to notify the employer member prior to executing any transactions is fundamental in maintaining regulatory oversight and ensuring that the employer can evaluate potential conflicts of interest that may arise. This helps protect both the member firm and its associated persons from inadvertent violations of securities laws. Additionally, informing the associated person that their employer will be notified is crucial. This facilitates transparency and allows the associated person to be aware that their trading activities are being communicated, which can help in fostering trust and compliance within the securities industry. Lastly, the option to send duplicate trade confirmations upon request strengthens the oversight process, allowing the employer firm to keep track of transactions conducted by their associated persons. This practice ensures that the employer can monitor for any unusual trading patterns or activities that could indicate issues such as regulatory violations or conflicts of interest. Therefore, it is essential to recognize that all these actions—notifying the employer, informing the associated person, and providing duplicate confirmations—work together to uphold the integrity of the financial markets and support compliance with FINRA regulations.