A broker-dealer places a temporary hold on a requested cash disbursement from a 72-year-old customer's account due to reasonable suspicion of financial exploitation. According to FINRA Rule 2165, which action is the firm required to take following the placement of this hold?
- Provide notification of the hold and the reason for it to all authorized account parties and the designated trusted contact person within two business days.Answer
- BImmediately freeze all securities trading activity and cancel all pending buy and sell orders in the account.
- CObtain written approval from FINRA or state securities regulators prior to placing the initial temporary hold.
- DAutomatically liquidate the customer's securities holdings to cash to prevent market losses during the review period.
Answer
Provide notification of the hold and the reason for it to all authorized account parties and the designated trusted contact person within two business days.
Under FINRA Rule 2165, placing a temporary hold on a disbursement requires the member firm to initiate an internal review and provide notification of the hold (along with the reason) to all parties authorized to transact business on the account and the designated trusted contact person no later than two business days after the hold was placed.
Step-by-Step Solution
Key Concept
FINRA Rule 2165 Disbursement Hold Notification Timelines