A broker-dealer allows an unregistered individual to perform clerical duties, which include handling incoming mail, opening new account applications, and forwarding them to a registered principal for approval. The individual also occasionally answers basic customer inquiries about their account balances. Which of these activities would be a violation of FINRA registration requirements?
- AOpening new account applications.
- BForwarding applications to a principal for approval.
- CAnswering basic customer inquiries about account balances.
- DHandling incoming mail.
Show answer & explanationAnswer & explanation
Correct answer: C. Answering basic customer inquiries about account balances.
Answering customer inquiries about account balances, even if basic, is generally considered to be providing information that requires a registered representative's knowledge and oversight. Unregistered individuals are typically limited to purely clerical or ministerial tasks that do not involve interaction with customers regarding their accounts or investments.
Why the other options are wrong
- A. Opening new account applications (i.e., preparing the paperwork) can be a clerical task, provided no recommendations or advice are given.
- B. Forwarding documents for approval is a clerical function.
- D. Handling incoming mail is a purely clerical task and does not require registration.
Unregistered Person Activities
Unregistered individuals at a broker-dealer are limited to performing purely clerical or ministerial tasks and cannot engage in activities that require registration, such as soliciting business, taking orders, or providing investment-related information to clients.
- Cannot solicit or accept orders.
- Cannot provide investment advice or recommendations.
- Cannot handle customer funds or securities.
- Cannot discuss account specifics with clients beyond basic administrative functions.
Memory trick: Unregistered means no talking to clients about their money.