Question

"A long time customer has purchased securities in a margin account and is experiencing a temporary cash shortfall. The customer tells the registered representative that he cannot pay on settlement; and the registered representative offers to lend the customer the necessary funds. This action is:"

Answer 1

Answer: Prohibited.

Step-by-step explanation:

The Financial Industry Regulatory Authority (FINRA) frowns upon the action described above.

FINRA strongly prohibits the personal borrowing of money by the representative to a customer or vice versa. The only time this prohibition can be waved is if the parties are married or family.

Seeing as there was no mention of the parties being family, this action is prohibited.