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A registered representative services the brokerage account of her father-in-law at her broker-dealer. The father-in-law has asked the registered representative to act as the trustee in a trust account for her spouse and children. The following assets are being donated by the father-in-law into the trust:

Office Building: $15,500,000
Construction Company: $20,000,000
Construction Equipment: $ 2,000,000
The registered representative has agreed not to charge a trustee's fee to do this. Does she have to get permission of her broker-dealer to act as trustee?


A. No, because it is a family relationship
B. No, because the trust does not hold securities
C. No, because she is not being compensated to be the trustee
D. Yes, because this is an outside business activity

Respuesta :

ofentsemaphalla

Answer:

D. Yes, because this is an outside business activity

Explanation:

Every other "OBA" - Outside Business Activity - should be disclosed to the corporation and authorised by the company.

In addition, it should be recorded on the U4 Form of such a licensed representative and disclosed in the BrokerCheck report of that person. Keep in mind that a person doesn't have to be reimbursed for an OBA to occur.

Whenever the delegate is in a role to direct the outside business entity's investment activities, it makes it an OBA.

The notion that perhaps the licensed representative, as just a beneficiary, would be able to supervise an office building as well as a construction company's activities, which both of these organizations may have servicing and investment accounts, makes it an OBA.

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