Finra Series-6 Exam - 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

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Tiera

4 months ago

If Tom's not selling investments, it might be okay, but still risky!

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Hubert

4 months ago

I’m surprised this is even a question. Isn’t it a clear conflict of interest?

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Martina

4 months ago

Wait, can he really take money from a client? That sounds risky.

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Latricia

5 months ago

I think he can accept it if he gets pre-approval. Seems fair.

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Malcolm

5 months ago

Matt should definitely refuse Tom's offer. Client relationships matter!

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Clemencia

5 months ago

I vaguely recall something about conflicts of interest, but I’m not sure if it applies here. D sounds tempting, but I feel like it could lead to issues down the line.

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Irene

5 months ago

I think I read that personal relationships can complicate things, but I’m not confident that just being friends is enough to bypass the rules. I lean towards A.

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Marsha

5 months ago

I’m not entirely sure, but I feel like there was a practice question that mentioned needing pre-approval for any financial transactions with clients. So maybe B is the right answer?

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Beckie

5 months ago

I remember something about the ethical guidelines regarding loans between clients and representatives. I think option A might be the safest choice.

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Chantell

5 months ago

Option C seems like the way to go here. Since Matt and Tom's relationship predates the client-agent dynamic, I don't think Matt needs to get approval to accept the loan. As long as it doesn't involve Tom's investments, I'd say he's in the clear.

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Elinore

5 months ago

Hmm, this is a tricky situation. I'd lean towards option B - Matt should get pre-approval from his firm before accepting the loan, just to play it safe and avoid any potential conflicts of interest.

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Rodolfo

5 months ago

I'm not entirely sure about this one. The relationship between Matt and Tom seems to complicate things, but I think the key is whether Matt needs to get approval from his firm before accepting the loan.

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Leonardo

6 months ago

I feel pretty confident that the right answer is A - Matt has to refuse the loan since Tom is his client. That seems like a clear-cut ethical violation that he can't get around, even if they're friends.

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Dorthy

1 year 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!

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Julie

1 year ago

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

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Joaquin

1 year ago

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

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Carissa

1 year ago

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

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Keneth

1 year ago

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

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Latonia

1 year 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?

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Brande

1 year ago

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

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Denise

1 year ago

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

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Jeanice

1 year ago

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

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Margurite

1 year 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.

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Carin

1 year 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.

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Sanjuana

1 year ago

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

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Ernest

1 year ago

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

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Catrice

1 year 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?

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Moon

1 year ago

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

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Tesha

1 year 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.

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