Question

ABC Advisers, Inc., a federal covered investment adviser is a wholly owned subsidiary of ABC Corporation, a holding company that also owns ABC Securities, a full-service broker-dealer that is a member of the New York Stock Exchange and FINRA. One of the clients of ABC Advisers calls his IAR to explain that he has just received a margin call in his ABC Securities account. Under these circumstances, it would NOT be prohibited for the IAR to use securities owned in the advisory account to obtain a loan for this client

Answer 1

Because the two firms are just affiliates.

Step-by-step explanation:

Looking at the narration in this scenario , there exist an affiliated relationship between the two parties.

Affiliation in business is defined as a form of relationship that exist between two or more companies where a parent company attains control in the others by acquiring less than 50% of their shares

Based on this ,it will not be prohibited for the IAR to use securities owned in the advisory account to obtain a loan for his client as they are just affiliated to the parent company and