General Securities Sales Supervisor (Series10) Practice Exam

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In relation to free credit balance notifications, what is the minimum frequency broker-dealers must notify customers if they send monthly statements?

Monthly
Quarterly
Semi-annually
Yearly

The correct answer is: Monthly

Broker-dealers are required to notify customers about their free credit balances at least on a monthly basis if they are sending out monthly statements. This regulation ensures that customers are regularly informed about any cash or securities they may have on deposit that are available for withdrawal or transfer. Monthly notifications help maintain transparency and keep customers aware of their account status, promoting effective account management and informed decision-making. While some other frequencies like quarterly, semi-annually, or yearly might be levels of notification under different circumstances, they do not meet the regulatory requirements that apply when monthly statements are issued. Therefore, monthly notifications stand out as the correct and necessary frequency in this scenario. This regulation aims to protect investors by ensuring they have timely and regular access to important information about their accounts.