15.3 Account Management and Supervision
Trading authorization, supervision, and documentation rules prevent unauthorized trading and safeguard client accounts.
Key NASAA Exam Takeaways
- Discretionary Authority requires written power of attorney signed by the client.
- NASAA 10-Day Oral Discretion Exception: For Investment Advisers ONLY, oral discretionary authority is permitted for up to 10 BUSINESS DAYS after the initial discretionary trade, after which written authorization must be obtained.
- Broker-Dealer Agents CANNOT exercise discretion without prior written authorization under any circumstances.
- Time and Price Discretion: An agent may determine the specific time and execution price for an order without discretionary paperwork, valid ONLY for that trading day.
- Account statements must be delivered at least quarterly (monthly if penny stock or active trading occurred).
Knowledge Checkpoint • Section 15.3
An investor contacts an Investment Adviser Representative (IAR) and verbally grants authority to manage their portfolio while the client is traveling. Under NASAA rules, how long does the IAR have to obtain written discretionary authority after the first discretionary transaction?