SIE Exam Question 620: Answer and Explanation

Question: 620

According to FINRA Rule 3240, which of the following is correct regarding borrowing and lending arrangements between a Registered Investment Advisor and its customers?

• A. The specific borrowing/lending arrangement must meet certain conditions, such as the customer cannot be an immediate family member.
• B. Proper notification of the borrowing or lending arrangement must be given, but advanced approval is not required.
• C. The member firm must have a written policy in place regarding borrowing and lending arrangements.
• D. All of the above are correct.

Correct Answer: C

Explanation:

According to FINRA Rule 3240, borrowing and lending arrangements between a Registered Investment Advisor and its customers requires the member firm to have a written policy in place.