FINRA Series 63 – Uniform Securities Agent State Law — Question 4

Which of the following scenarios does not meet the definition of "custody" under NASAA Model Rules?

Answer options

• A. An investment adviser is mistakenly sent a client's securities, but returns them to the sender within three business days of receipt.
• B. An investment adviser has general power of attorney for a client and is authorized to withdraw client funds or securities that are on deposit with a registered broker-dealer upon the investment adviser's request.
• C. An investment adviser receives a check from a client that is written to a mutual fund and forwards the check to the mutual fund within three business days of receipt.
• D. An investment adviser keeps a client's securities in its safety deposit box.

Correct answer: A

Explanation

The correct answer is A because returning mistakenly received securities within three business days does not constitute custody. In contrast, options B, C, and D involve situations where the investment adviser holds or has the authority over client assets, which aligns with the definition of custody.