SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 65: Answer and Explanation

Question: 65

Which of the following statements is true regarding FINRA 4514 – Authorization Records for Negotiable Instruments Drawn from a Customer's Account?

• A. A customer must give oral or written permission for a representative to withdraw money from the customer's account.
• B. A customer must give written permission for a representative to withdraw money or money-like assets from the customer's account.
• C. A customer must give permission before a representative removes bearer bonds from the member firm's premises.
• D. A customer must give oral or written permission for the representative to keep blank checks signed by the customer in the representative's file.

Correct Answer: B

Explanation:

B: Choice B is correct because the rule is intended to protect customer from a representative removing funds or similar items from the customer's account without the customer's intending that to be done. Choice A is incorrect because the permission must be given in writing. Choice C is incorrect because the rule prohibits removal of cash or cash-like items from the customer's account. If bearer bonds were removed from the member firm's premises but were still recorded in the customer's account, the rule would likely not apply. Choice D is incorrect because the rule deals specifically with the withdrawal of cash or similar assets.