FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProfessional Conduct and Ethical ConsiderationsMedium
A registered representative receives a request from a client to transfer their account to a new firm. The representative, hoping to retain the client, delays processing the transfer paperwork for several days while attempting to persuade the client to stay. Which FINRA rule is most likely being violated?
- AFINRA Rule 2030 (Restrictions on the Association of Persons Subject to Statutory Disqualification)
- BFINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers)
- CFINRA Rule 2090 (Know Your Customer)
- DFINRA Rule 2165 (Financial Exploitation of Specified Adults)
Show answer & explanationAnswer & explanation
Correct answer: B. FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers)
FINRA Rule 2273 specifically addresses the obligations of firms and representatives when customers transfer accounts, including the requirement to process such requests promptly without undue delay.
Why the other options are wrong
- A. This rule concerns individuals who are statutorily disqualified from associating with FINRA members, not account transfer delays.
- C. Know Your Customer (KYC) relates to understanding a client's investment profile, not account transfers.
- D. This rule deals with protecting vulnerable adults from financial exploitation, which is not the primary issue here.
Account Transfer Delay
The act of intentionally delaying the processing of a client's request to transfer their account to another firm, often in an attempt to retain the client.
- Prohibited by FINRA Rule 2273.
- Must process transfer requests promptly.
- Designed to protect client's right to choose their firm.
Memory trick: Transferring accounts must be prompt, not a representative's trap.