NASAA Series 63Regulation of Broker-Dealers and AgentsHard
An agent is registered with Broker-Dealer Alpha in State M. The agent wishes to also register with Broker-Dealer Beta, which is also registered in State M, to sell a different line of products. Under the Uniform Securities Act, what is generally required for an agent to be registered with two broker-dealers simultaneously?
- AIt is permitted if both broker-dealers are under common ownership.
- BThis is strictly prohibited under all circumstances.
- CIt is permitted only if the agent works part-time for both firms.
- DIt is permitted if the agent receives written authorization from both broker-dealers and the Administrator.
Show answer & explanationAnswer & explanation
Correct answer: D. It is permitted if the agent receives written authorization from both broker-dealers and the Administrator.
Dual registration (registration with two broker-dealers simultaneously) is generally prohibited unless specific conditions are met, primarily obtaining written authorization from both broker-dealers and the Administrator. This ensures proper supervision and prevents conflicts of interest.
Why the other options are wrong
- A. Common ownership does not automatically permit dual registration without explicit approvals.
- B. While generally restricted, it's not strictly prohibited under all circumstances.
- C. Part-time status does not exempt an agent from the rules regarding dual registration.
Agent Dual Registration
An agent may be registered with more than one broker-dealer simultaneously only if authorized by all involved broker-dealers and the state Administrator.
- Generally prohibited unless specific conditions are met.
- Requires written consent from all employing broker-dealers.
- Administrator must also approve the arrangement.
- Ensures proper supervision and addresses potential conflicts of interest.
Memory trick: One agent, two firms? Get everyone's 'go-ahead' on paper.