Q:
Mrs Jaxsonheim is considered one of StrateShooter National Bank's best and most financially stable customers. She approaches the bank President, also a friend, at a Chamber of Commerce event about a cash loan. Under the Uniform Securities Act, is the bank allowed to loan cash or securities to this customer?
a) Possibly, if the loan is in cash and not in securities.
b) Maybe, because Mrs Jaxsonheim is financially solvent and will repay the loan.
c) Yes, if the bank is in the lending business.
d) No, it is a conflict of interest because Mrs Jaxsonheim and the president are friends.
A:
The correct answer is c.
Under the Uniform Securities Act, it is not considered ethical to lend cash or securities to a customer. However, it is considered permissible if the lender is a financial institution that is chartered to transact loans. Likewise, it is also considered unethical for an agent to take client funds for personal use.

RELATED FAQS

  1. If I have only a limited amount of time to study for the Series 6, what should I ...

    Learn what to focus on when studying for the Series 6 while reviewing important aspects of the exam, including its content ...
  2. What role does the 'chip cycle' play in the electronics sector?

    Read about some of the best and most popular test prep classes for the Series 6 FINRA securities licensing exam, including ...
  3. What does passing the Series 6 enable me to do?

    Learn more about the Series 6, what the examination and license are and what the license enables an individual to buy, sell ...
  4. What are the differences between the Series 6 exam and the Series 7 exam?

    Learn about the regulatory exams needed to become a limited or registered representative and the main differences between ...
RELATED TERMS
  1. Series 6

    A securities license entitling the holder to register as a limited ...
  2. Series 79

    A examination to ensure a candidate is qualified to become a ...
  3. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  4. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  5. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  6. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!