General Securities Sales Supervisor (Series10) Practice Exam

Which document is essential for identifying individuals authorized to trade a corporate account?

1. New account form

2. Corporate resolution

3. Articles of incorporation

4. Registration statement

The correct answer is: Corporate resolution

The corporate resolution is a crucial document that outlines the decisions made by a corporation's board of directors or its governing body. It specifically indicates who is authorized to act on behalf of the corporation in various capacities, including trading securities on a corporate account. This document is essential as it helps to prevent unauthorized trading and ensures that the person executing trades has been granted the appropriate authority by the corporation’s leadership. It explicitly names individuals who have the power to manage the account, providing clarity and protection for both the firm and the corporation. By verifying this information, a broker-dealer can appropriately manage compliance and regulatory requirements tied to corporate accounts. In contrast, the new account form serves to collect general information about the account but doesn't specifically designate authorized individuals. Articles of incorporation outline the formation of the company and its operational framework, but they don't provide details regarding the authority to trade. Similarly, a registration statement is primarily concerned with the details of a new securities offering and does not address who can manage an existing corporate account. Therefore, the corporate resolution is the key document for identifying authorized individuals in this context.