FINRA General Securities Representative SIE Question # 38 Topic 5 Discussion
SIE Exam Topic 5 Question 38 Discussion:
Question #: 38
Topic #: 5
On settlement date, a customer is unable to pay for a purchase in his cash account. His position is liquidated. Which of the following statements is true according to Federal Reserve Regulation T?
Federal Reserve Regulation T mandates that customers must pay for purchases in a cash account within two business days of settlement (T+4). If payment is not made, the brokerage firm must liquidate the securities and place the account on a 90-day restriction.
C is correctbecause the customer’s account is frozen for 90 days, during which all trades must be paid for in advance.
Ais incorrect as closing transactions are still permitted but require prepayment.
Bis incorrect because the restriction lasts for 90 days, not 30.
Dis incorrect as only the delinquent account, not related accounts, is frozen.
[Reference:Federal Reserve Regulation T, ]
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