Trading Authorization
Chapters in this video
- 0:00 Why oral authorization fails the legal test
- 1:37 Full versus limited authorization: the withdrawal rights death match
- 2:29 Three strict broker-dealer rules for third-party paperwork
- 3:57 Four fiduciary accounts and the strict legal duty
- 5:48 UGMA/UTMA custodial accounts: acronyms and the minor beneficiary
- 6:25 Four exam traps rapid-fire recap
What this video covers
- Why an oral grant of trading authority is legally invalid, and why the power of attorney must be written, signed, and on file at the broker-dealer
- The scope of limited trading authorization: buying and selling securities only, with no withdrawal rights
- The scope of full (unlimited) trading authorization: buying, selling, and withdrawing cash or securities, and why the word "withdraw" is your exam trigger
- The three broker-dealer requirements for third-party authorization: keep a copy on file, identify the third party on account records, and retain the right to refuse or restrict the authorization
- The four inherently fiduciary accounts: trust, estate, guardian, and custodial (UGMA/UTMA)
- Why the fiduciary must act in the best interest of the beneficiary, not for personal gain, regardless of account type
- How to distinguish third-party authorization (granted by the customer) from fiduciary duty (legally imposed on the account type)
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