SIE Overview of the Regulatory Framework Question 14: Answer and Explanation

Question: 14

Which of the following statements is correct regarding what FINRA Rule 4330 – Customer Protection – Permissible Use of Customers' Securities requires a member firm to receive permission in writing from a customer before doing?

• A. Changing that customer's security records from paper to digital
• B. Publishing that customer's security holdings
• C. Lending that customer's securities
• D. Sharing information about that customer's securities with governmental agencies

Correct Answer: C

Explanation:

C: Choice C is correct because the rule requires written authorization to lend a customer's securities. Choices A, B, and D are incorrect because FINRA Rule 4330 – Customer Protection – Permissible Use of Customers' Securities is focused on obtaining written permission to lend the customer's securities, and does not address changing the format of the customer's account records, publishing the customer's assets, or providing the customer's information to government agencies.