Securities Industry Essentials (SIE) ExamUnderstanding Trading, Customer Accounts, and Prohibited ActivitiesMedium
A registered representative (RR) is informed by a client that they have moved to a new state. According to FINRA rules, what is the most appropriate action for the RR to take regarding the client's account?
- AAdvise the client to open a new account with a local firm in their new state.
- BPlace a temporary hold on all account activities until the client updates their address.
- CInform their principal immediately to determine if the RR is registered in the new state.
- DContinue servicing the account as usual, as the client initiated the move.
Show answer & explanationAnswer & explanation
Correct answer: C. Inform their principal immediately to determine if the RR is registered in the new state.
RRs must be properly registered in any state where they conduct business. A client moving to a new state may require the RR to become registered in that state or for the account to be transferred to another RR or branch. The principal must be informed to ensure compliance.
Why the other options are wrong
- A. While possible, it's not the RR's immediate responsibility to advise this without consulting a principal.
- B. Placing a hold is not the first or most appropriate action; ensuring proper registration is key.
- D. This is incorrect; RRs must be registered in states where they conduct business.
State Registration Requirements
Securities professionals must be registered in each state where they conduct business with clients.
- FINRA Series exams qualify for federal registration, but state registration is separate.
- Moving clients or RRs can trigger new state registration requirements.
- Firms have procedures for handling clients who move to new states.
Memory trick: New State, New Rules; tell the Boss to check the Tools.