When is it acceptable under NASAA rules for an IAR to exercise discretionary authority over the account of an investor?

A) Only when the IAR gives written notification to the investor with the confirmation of the trade.

B) If the IAR receives authority via telephone and this is followed by written authority within 10 days, the IAR may exercise discretion over the account.

C) Only when the IAR is increasing or decreasing an existing position that is held by the investor.

D) If the IAR has suggested allowing discretionary authority, then the IAR may use discretionary authority.

Question

Business

Alexzander Ellis

2 December, 05:11

When is it acceptable under NASAA rules for an IAR to exercise discretionary authority over the account of an investor?

A) Only when the IAR gives written notification to the investor with the confirmation of the trade.

B) If the IAR receives authority via telephone and this is followed by written authority within 10 days, the IAR may exercise discretion over the account.

C) Only when the IAR is increasing or decreasing an existing position that is held by the investor.

D) If the IAR has suggested allowing discretionary authority, then the IAR may use discretionary authority.

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Answers (1)

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Elisa Duncan · Answer 1

B) If the IAR receives authority via telephone and this is followed by written authority within 10 days, the IAR may exercise discretion over the account.

Explanation:

The members of the North American Securities Administrators Association (NASAA) must follow their Model Rule which allows IAR the use of discretionary authority with verbal authorization (in this case a telephone call), but the verbal authorization must be confirmed by a written authorization within 10 days.