Client Funds and Securities
Chapters in this video
- 0:00 Fiduciary duty and the non-waivable golden rule
- 1:19 Custody trigger: fee deduction means access
- 2:14 Net worth minimums: firm, not client
- 3:04 Commingling versus conversion
- 3:45 AAA discretion test and 10-day paperwork rule
- 5:03 Limited versus full trading authorization
- 5:35 UPIA portfolio-level prudence
- 6:07 Agency cross: six safeguards, no dual recommendations
- 7:12 AML, CTR at $10,000, and structuring as federal crime
- 8:04 Rapid-fire exam recap
What this video covers
- Why an investment adviser (IA) owes a strict, non-waivable fiduciary duty to clients, and how this differs from the broker-dealer suitability standard
- What creates custody of client funds or securities, including why fee deduction alone triggers custody even without physical possession
- The $35,000 and $10,000 minimum net worth thresholds for state-registered advisers with custody versus discretion, and why the client's net worth is irrelevant
- How the AAA memory aid (asset, action, amount) distinguishes discretionary from non-discretionary orders, plus the 10-business-day paperwork deadline
- The six required safeguards for agency cross transactions, and why dual recommendations to both sides are prohibited even with blanket consent
- How the Uniform Prudent Investor Act (UPIA) judges prudence at the total portfolio level rather than by individual investment risk
- Currency transaction reports (CTRs) at $10,000, suspicious activity reports (SARs) at $5,000, and why structuring cash deposits to evade reporting is a federal crime
Read the full lesson, free
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