SIE: Understanding Trading, Customer Accounts and Prohibited Activities

Official outline section: Understanding Trading, Customer Accounts and Prohibited Activities, 31% of the SIE (23 of 75 scored questions), per FINRA - SIE Content Outline (2025).

31% of the SIE (23 questions): order types, returns, settlement, corporate actions, account types and registrations, AML, books and records, and the conduct that gets people barred.

Orders. Market orders execute immediately at the best available price. Limit orders set a worst acceptable price. A buy stop sits above the market and becomes a market order when triggered (used to protect a short or to buy a breakout); a sell stop sits below.

Dividend dates. The board declares; the record date determines who is paid; the ex-dividend date is set so trades on or after it do not receive the dividend. With T+1 settlement, the ex-date is generally the record date.

Accounts. JTWROS: the survivor takes the deceased owner’s share. TIC: each share passes to that owner’s estate. UTMA/UGMA custodial accounts have one custodian and one minor, and the assets belong to the minor.

AML. Placement (cash enters), layering (transactions obscure the trail), integration (funds re-enter as legitimate). Broker-dealers file CTRs for cash over $10,000 and SARs for suspicious activity of $5,000 or more.

• Structuring deposits just under $10,000 to avoid a CTR is itself a crime and a SAR trigger.
• Borrowing from or lending to customers is prohibited unless the firm’s written procedures allow it and the arrangement fits a permitted category.