Account Authorizations: Discretionary Accounts

What this video covers

• How the three A's (action, asset, and amount) define whether a rep is exercising discretion on any given trade
• Why the time and price exception is not full discretion, when it expires at end of business day, and the institutional account exception with good till canceled, not held instructions
• The two required documents for legal full discretion: prior written customer authorization naming the specific rep, plus written principal acceptance of the account
• Why verbal authorization from the customer or verbal approval from the principal is never sufficient under the discretionary accounts rule
• How principal supervision prevents excessive size and churning through frequent interval review and prompt written approval of each discretionary order
• The four strict conditions of the money market bulk exchange exception, including the tabular fee comparison, prospectus comparison, and mandatory 30-day negative response wait
• How to spot unauthorized trading scenarios that combine multiple violations of the discretionary accounts rule