Question

A registered securities agent solicits a customer to buy mutual fund shares. The customer buys 200 shares, sending a check made out to the fund's custodian bank to the agent. The agent does not record the trade on the books of the broker-dealer.

Under the Uniform Securities Act, this action is:

Answer 1

Answer: prohibited private securities transaction

Explanation: The action performed by the registered securities agent by soliciting a customer to buy mutual funds and not recording the trade in the books after the customer buys under the Uniform Securities Act is a prohibited private securities transaction. This is essentially because private securities transactions are a prohibited business practice under the Act as a result, every trade effected by an agent must be recorded on the books of the broker-dealer and which in turn must be supervised by the broker-dealer.