What is prohibited concerning clients' assets?

What is prohibited concerning clients' assets?

• A. Using them for trading on the client's behalf
• B. Borrowing from their account
• C. Providing them with cautionary advice
• D. Investing in high-risk securities

Answer: (B)

Borrowing from a client's account is prohibited because it involves taking funds or assets that belong to the client and using them for personal or unauthorized purposes. This practice undermines the trust and fiduciary responsibility that a dealer representative has toward their clients. Clients expect their assets to be handled with the utmost care, and borrowing from an account violates both ethical standards and regulatory requirements that protect clients' interests.

Using clients' assets for trading on their behalf is typically part of the services provided by a dealer representative, as it involves acting on behalf of the client to make investments that align with their financial goals. Providing cautionary advice is also a vital part of a representative's role, as it helps clients make informed decisions about their investments. Investing in high-risk securities can be appropriate depending on the client’s risk tolerance and investment strategy, so long as it is properly disclosed and agreed upon.