General Securities Sales Supervisor (Series10) Practice Exam

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What is a responsibility of a broker-dealer when changing sweep accounts?

The customer must positively consent to the change
They can use negative consent for changes
They must disclose all existing customer assets
Changes can be made without notifying customers

The correct answer is: The customer must positively consent to the change

A broker-dealer holds significant fiduciary responsibilities when managing customer accounts, which includes making changes to sweep accounts. When altering the terms of how cash balances in a client's account are managed, it is essential for the broker-dealer to obtain positive consent from the customer. This means that customers must actively agree to the changes being made rather than assuming consent through non-response or inactivity. This requirement helps protect the interests of customers, ensuring they are fully aware of and agree to any alterations that could affect their funds, investment strategies, or overall account management. By requiring positive consent, broker-dealers reinforce transparency and build trust with their clients, which is crucial in maintaining a compliant and ethically sound practice.