Glossary
Agency Cross Transaction – Acting as the agent for both parties in a transaction.
Agent – From the USA: “any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.”
Bond – A type of security that represents a loan from an investor to a corporation or government entity.
Broker-dealer – From the USA: “any person engaged in the business of effecting transactions in securities for the account of others or for his own account.”
Brochure Rule – Investment advisers subject to state registration may be required by their state to provide certain basic information about their services to prospective and existing clients prior to entering or renewing an advisory contract.
Cease and Desist Order – An order from the administrator to stop some or all activities.
Churning – An ethical violation that involves a professional recommending or making trades in a customer’s account, simply for the sake of generating revenue.
Clerical Acts – Secretarial acts that do not require registration.
Conflict of Interest – A situation in which a professional or firm acting in its own interest or in the interest of another party may be detrimental to a client. Conflicts of interest must be disclosed to the client.
Commission – A form of compensation where a professional or firm is paid for helping a client conduct a transaction.
Commodity – A physical good that is traded over exchanges or markets similar to how a stock or bond is traded. Examples might include grain, cotton, and precious metals.
Custody – Physical possession or actual control over movement and access to clients’ securities and funds.
De Minimis Rule – This Latin term refers to “little things” or “trifles.” In the case of the Uniform Securities Act and the Series 63 exam, it refers to the rule that investment advisers and