Question of the Week

A sales representative solicits and executes a mutual fund trade, but fails to record the trade with the broker-dealer. Under the Uniform Securities Act, this action would be:

a) Allowed, but only if no commission was taken on the trade
b) Allowed, since mutual fund trades are not required to be kept on the broker-dealer’s books
c) Prohibited
d) Allowed, since mutual fund trades are recorded on the mutual fund company’s books

Answer: The correct answer is c).

This would be considered a private securities transaction, which is not permitted. All securities trades must be entered into the broker-dealer’s books.