Question

a registered broker-dealer is under common control with a registered investment adviser. an individual who is an agent of the broker-dealer and an investment adviser representative of the adviser has a client with $250,000 under an asset management program. the terms of the account call for discretionary power to be given for the account and all required forms have been received. in the opinion of the iar, the purchase of 500 shares of rmbm common stock is an appropriate addition to the portfolio. the broker-dealer is a market maker in rmbm, and the sale will be made as a principal, a fact that is disclosed to the client on the trade confirmation. in this situation, the registered person has acted?

Answer 1

The registered person, being both an agent of a broker-dealer and an investment adviser representative, acted appropriately. They utilized their discretionary power responsibly and ethically, and also fulfilled disclosure requirements.

Step-by-step explanation:

In this scenario, the registered person, who is an agent of the broker-dealer and an investment adviser representative (IAR) of the adviser, has acted appropriately and in accordance with standard industry practices. The situation described involves the exercise of discretionary power which is granted through the asset management program. It's important to note here that the client has been informed about the broker-dealer's position as a market maker in RMBM, ensuring transparency and adherence to regulations. This disclosure occurred on the trade confirmation, one of the many key documents for maintaining proper and in-depth communication between all parties involved. Thus, the actions taken reflect appropriate discretion, ethical behavior, and the fulfilment of disclosure requirements under financial law regulations.

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