General Securities Sales Supervisor (Series10) Practice Exam

What document is required if someone with power of attorney enters an order on behalf of a client?

1. Order memorandum

2. Power of attorney document

3. Written consent from the client

4. Account opening form

The correct answer is: Order memorandum

The correct answer is that an order memorandum is required when someone with power of attorney (POA) enters an order on behalf of a client. This document serves as a formal record of the transaction being executed on behalf of the client, allowing the brokerage firm to accurately process and monitor the order. When an attorney-in-fact, the individual granted power of attorney, places an order, it is essential to document the specifics of that order for both compliance and auditing purposes. The order memorandum includes critical details such as the type of order, security involved, and the identity of the parties, which is crucial for proper transaction execution and later review. Although the power of attorney document itself outlines the authority granted to an agent, it does not serve as the mechanism for entering orders. Similarly, written consent from the client is typically not required when the POA is already in place. The account opening form is useful for establishing the relationship with the client but is not directly relevant to the specific transaction being executed. Thus, an order memorandum is the appropriate documentation needed for this scenario.