Finra Exam Series-6 Topic 5 Question 88 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 88
Topic #: 5

Matt is a registered representative with Fine, Howard, Fine and Associates. Tom, an old fraternity brother, is one of his clients. Business has been bad, and Matt is going to have difficulties making this month's mortgage payment. Tom was commiserating with him when the two hooked up to have a couple of beers together and offered to lend Matt some money to see him through the rough times. Based on these facts:

AMatt must refuse Tom's offer since Tom is one of his clients.

BMatt can accept Tom's offer, but only after obtaining pre-approval from Fine, Howard, Fine.

CMatt can accept the offer without having to obtain pre-approval from his employer since he and Tom are former fraternity brothers and their friendship pre-dates their agent/client relationship.

DMatt can accept the offer as long as Tom will not need to sell any investments to lend Matt the money. This would constitute a conflict of interest.

Show Suggested Answer

Suggested Answer: B

Since Tom and Matt are old fraternity brothers, Matt may accept Tom's offer, but only after obtaining pre-approval from Fine, Howard, Fine. FINRA's Rule 3240 allows for borrowing and lending between a registered representative and a client if ''the lending arrangement is based on a personal relationship with the customer, such that the loan would not have been solicited, offered, or given had the customer and the associated person not maintained a relationship outside of the broker/customer relationship.''

by Kristal at Sep 18, 2024, 01:19 PM

Limited Time Offer

25%

Off

Get Premium Series-6 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Dorthy

2 months ago

Wait, is this a trick question? Matt's gotta be doing some shady stuff if he's already struggling to make his mortgage payment. Someone call the SEC, we got a rogue broker over here!

upvoted 0 times

Julie

11 days ago

Yeah, as long as there's no conflict of interest, it should be okay for Matt to accept the loan from Tom.

upvoted 0 times

...

Joaquin

12 days ago

I think as long as Matt and Tom have a genuine friendship, he should be able to accept the offer.

upvoted 0 times

...

Carissa

21 days ago

But Matt needs to be careful about accepting money from a client, it could be a conflict of interest.

upvoted 0 times

...

Keneth

26 days ago

Tom is just trying to help out a friend in need, nothing shady about that.

upvoted 0 times

...

Latonia

2 months ago

Yo, Matt's gotta be careful here. That's a serious conflict of interest, even if Tom's not liquidating anything. He's better off just getting a side gig or something to cover that mortgage, you know?

upvoted 0 times

Brande

1 months ago

Maybe Matt can look into getting a part-time job to help with his mortgage instead of borrowing money from Tom.

upvoted 0 times

...

Denise

1 months ago

I agree, accepting money from a client can get messy. It's better to find another solution.

upvoted 0 times

...

Jeanice

1 months ago

Yeah, Matt should definitely be cautious. It's important to avoid any conflicts of interest.

upvoted 0 times

...

Margurite

2 months ago

Haha, Matt and Tom are old frat brothers, so I say he can just take the money and not worry about it. What could go wrong, right? As long as Tom's not cashing out investments to lend it, they're good.

upvoted 0 times

...

Carin

2 months ago

Nah, man, I think Matt can take the money, but he's gotta run it by his boss first. Gotta cover his bases, you know? Don't want any issues with the big guys upstairs.

upvoted 0 times

...

Sanjuana

2 months ago

But wouldn't accepting the offer create a conflict of interest if Tom needs to sell investments to lend Matt the money?

upvoted 0 times

...

Ernest

2 months ago

I disagree. Matt can accept the offer without pre-approval since they are former fraternity brothers.

upvoted 0 times

...

Catrice

2 months ago

Dude, Matt totally has to refuse that offer. You can't be doing any personal deals with your clients, that's a big no-no! He's gotta keep it professional, you know?

upvoted 0 times

Moon

1 months ago

Yeah, that makes sense. Friendship should come first in this case.

upvoted 0 times

...

Tesha

1 months ago

C) Matt can accept the offer without having to obtain pre-approval from his employer since he and Tom are former fraternity brothers and their friendship pre-dates their agent/client relationship.

upvoted 0 times

...