Two business partners maintain a joint brokerage account structured as Tenants in Common (TIC). One partner calls the registered representative, places an order to liquidate $50,000 of stock, and requests that the resulting proceeds be sent via check payable solely to his individual name. Which of the following statements correctly describes how the broker-dealer must handle this request?
- The representative may execute the trade based on the single partner's instructions, but the disbursement check must be drawn payable to both owners jointly.Cevap
- BThe trade cannot be executed unless both owners submit joint written authorization, after which the check can be made payable to either owner individually.
- CBoth the order execution and the check issuance to the individual partner may proceed as requested, provided the partner owns at least 50% of the account.
- DThe transaction and disbursement request must both be refused until a durable Power of Attorney is formally filed with the member firm.
Cevap
The representative may execute the trade based on the single partner's order, but any check or distribution drawn from the account must be payable jointly to both account owners.
In joint accounts (including both Joint Tenants with Rights of Survivorship and Tenants in Common), FINRA rules and standard industry practice dictate that any authorized joint owner can unilaterally place trades. However, to protect all owners' equity, any financial disbursements (checks or wire transfers) must be made payable jointly to all account holders as named on the account registration.
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Joint Account Operating Rules: Unilateral Trading vs. Joint Disbursement Requirements