Question

A customer placed an order with an agent to sell 100 shares of ABC and he instructed the agent to limit any losses. The agent did not have discretionary authority over the account and waited to sell the shares, hoping to get a better price for the customer. The price of the shares went down, so the agent sold 50 ABC shares to limit the customer's losses. According to the Uniform Securities Act, this is a:_______.A) violation because the ​agent acted without discretionary authorityB) violation because the ​agent is required to execute sell transactions immediately after the order is placedC) permissible activity because the ​agent is obligated to get the best price for the customerD) permissible activity because the ​agent is not permitted to guarantee a price to a customer

Answer 1

.A) violation because the ​agent acted without discretionary authority

Step-by-step explanation:

Discretionary authority allows the agent to take certain courses of action which may not require prior approval from the client hence discretionary.

He is asked to reduce losses and discretionary authority does not affect his timing and execution and so his first actions to wait for profit does not violate discretionary authority. However the agent did not have discretionary authority in the above case and hence had no right to decrease the sale of the shares to 50.