SIE (Securities Industry Essentials) Practice Exam

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Which of the following rules is NOT implied with discretionary accounts?

  1. The client must approve each order

  2. A member of the brokerage house must approve each order in writing before order entry

  3. The broker has discretion over investment decisions

  4. The broker does not need individual order approval

The correct answer is: A member of the brokerage house must approve each order in writing before order entry

Discretionary accounts allow the broker to make investment decisions without needing approval from the client for each specific transaction. This means that options A, C, and D are all implied rules for discretionary accounts. Option B is incorrect because it states that a member of the brokerage house must approve each order in writing before order entry, which goes against the idea of a discretionary account where the broker has discretion over investment decisions. Therefore, option B is the NOT implied rule in a discretionary account.

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