Question of the Week

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.


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.