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
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.
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.