Sharing in Customer Accounts: Proportionality and Permission Rules
Under FINRA Rule 2150, when is a registered representative legally permitted to share in the profits and losses of a customer's account?
FINRA Rule 2150 allows representatives to share in customer profits/losses ONLY IF: (1) Prior written authorization is obtained from the customer; (2) Prior written permission is granted by the employing firm; and (3) Sharing is directly proportional to the capital contributed by the representative (the proportionality rule is waived for immediate family members).
Complete Analysis & Legal Rationale
Representatives can NEVER guarantee a customer against loss.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Accurately details written customer consent, written firm approval, and financial proportionality.
Verbal consent is illegal; written consent from customer and firm is required.
Permitted when the 3 explicit conditions are met.
Guarantees against loss are strictly prohibited under FINRA Rule 2150(b).
Official Standard: Codifies written approvals and proportionality requirements.