Securities Industry Essentials (SIE) ExamUnderstanding Trading, Customer Accounts, and Prohibited ActivitiesMedium
A registered representative receives a complaint from a client alleging unauthorized trading in their account. What is the representative's immediate obligation?
- AAttempt to resolve the complaint directly with the client.
- BIgnore the complaint if they believe it is unfounded.
- CForward the complaint to their supervisor or principal.
- DDocument the complaint and place it in the client's file without further action.
Show answer & explanationAnswer & explanation
Correct answer: C. Forward the complaint to their supervisor or principal.
FINRA rules require that all customer complaints, whether written or oral, must be immediately forwarded to a supervisor or principal for review and resolution. Registered representatives are not permitted to resolve complaints independently.
Why the other options are wrong
- A. Representatives are not permitted to resolve complaints independently; they must be escalated.
- B. Ignoring a complaint, regardless of perceived merit, is a serious violation of regulatory rules.
- D. While documenting is necessary, it is insufficient; the complaint must be escalated for review and resolution.
Customer Complaint Procedures
FINRA rules require all customer complaints, written or oral, to be immediately forwarded to a principal/supervisor. Firms must maintain a complaint file and report certain complaints to FINRA.
- All complaints must be reported to a principal.
- Representatives cannot resolve complaints independently.
- Firms must keep a complaint file for record-keeping.
- Certain complaints require reporting to FINRA.
Memory trick: Complaints go 'UP' the chain, never 'DOWN' to the rep.