General Securities Sales Supervisor (Series10) Practice Exam

Who qualifies as a "bona fide" customer entitled to receive a financial condition statement upon request?

1. One who has cash or securities in possession of the member

2. One who has traded through the member in the last 3 months

3. One who is not a member of FINRA

4. One who has engaged in any transaction with the member in the last 12 months

The correct answer is: One who has cash or securities in possession of the member

The concept of a "bona fide" customer is integral to understanding how financial firms interact with their clientele, particularly in the context of receiving a financial condition statement. The definition of a "bona fide" customer centers around the established relationship between the customer and the firm, with a clear indication of ownership or investment. In this case, a "bona fide" customer is recognized as one who has cash or securities in their possession held by the member firm. This connection signifies a direct investment or financial interest that the firm has a responsibility to disclose information about, including its financial condition. The transaction history and the ownership of assets demonstrate a vested interest, which warrants access to such financial statements. This definition excludes individuals or entities who may have had more transient relationships with the firm, such as those who have merely traded through the member recently or within the last year without holding any cash or securities in their custody. Members of FINRA and non-investors wouldn't typically qualify for access to these financial details because they lack a significant ongoing financial relationship with the firm. Understanding this distinction is critical for both compliance with regulatory requirements and maintaining transparency with customers regarding the financial health of the firm they are investing in.