Guarantees & Sharing in Accounts

Expect the exam to bury the violation inside friendly-sounding rep dialogue: a script that says “I’ll buy it back at your cost if it drops” or “this is guaranteed to double” is testing the guarantee prohibition, and the correct answer flags it regardless of how confident or well-meaning the rep is. The classic trap pairs that with a tempting “as long as the customer agrees in writing” distractor — but no paperwork can cure a guarantee against loss. Don’t confuse it with a guaranteed security — a bond whose interest and/or principal is backed by a company other than the issuer (a parent guaranteeing a subsidiary’s debt). That guarantee is built into the security for all holders, so it’s legitimate — not a rep promising one customer a result.

On the sharing side, students confuse the rules with unauthorized trading (trading without consent or written discretion) and discretionary authority (making the trade decisions — Action, Asset, Amount — not splitting P&L). Sharing is the rep keeping a slice of an account’s gains or losses. Memory hook: a guarantee against loss is “never, ever”; sharing is “only with both signatures.”