Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

Question: 1 / 400

What must a registered representative do before borrowing from or lending to a customer?

Verbal notification to the customer

Obtain written approval from the firm

Before a registered representative can borrow from or lend money to a customer, obtaining written approval from the firm is essential due to regulatory guidelines and firm policies. This requirement is in place to manage conflicts of interest, ensure transparency, and protect both the representative and the client. Additionally, the firm has protocols to evaluate the situation, assessing the nature of the transaction and ensuring that it aligns with ethical standards.

This process involves documenting the request and obtaining formal permission, which provides a record for compliance purposes. Although other options may imply forms of communication, they do not meet the regulatory requirement of pre-approval from the firm, which is a crucial step to uphold the integrity of financial practices and safeguard clients' interests.

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Notify the Financial Industry Regulatory Authority (FINRA)

Seek approval from the customer

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