Question

Under the NASAA Statement of Policy, an agent of a broker-dealer that has discretionary authority would NOT be subject to the prohibition on excessive trading of a customer account as long as the:

A. customer consents in writing to each recommended transaction
B. account is a non-managed fee based account
C. account has consistently increased in value
D. broker-dealer discounts the commissions charged to customers that are active traders

Answer 1

The correct answer in the given situation is as follow:

A. customer consents in writing to each recommended transaction

Step-by-step explanation:

NASAA:

It is known as The North American Securities Administrators Association which is such regulatory body that operates in North America, Canada and Mexico regarding small businesses, local communities and public funding.

• According to the NASAA statement of policy, the agent of a broker-dealer can't use any discretionary authority until unless he has written consent from the client.
• So, according to above statement, the broker dealer that has discretionary authority would not be subject to the prohibition on excessive trading of a customer account as long as the customer consents in writing to each recommendation transaction.