General Securities Sales Supervisor (Series10) Practice Exam

What is necessary for a member firm to hire another member firm’s employee on a temporary basis?

1. A written agreement with consent from the employee

2. A written agreement and consent from the employee’s firm

3. Consent from FINRA only

4. Mere verbal agreement between firms

The correct answer is: A written agreement and consent from the employee’s firm

For a member firm to hire another member firm's employee on a temporary basis, it is essential to have both a written agreement and consent from the employee’s firm. This requirement is in place to ensure transparency and proper communication between the firms involved, which upholds ethical standards and regulatory compliance. The necessity for a written agreement provides a formal framework that outlines the terms of the temporary employment, including responsibilities and duration. Consent from the employee’s firm is crucial as it acknowledges that the firm is aware of and approves the employee's temporary transfer. This cooperation helps to maintain trust and proper procedures within the industry, preventing situations that could lead to conflicts of interest or breach of contract. In contrast, relying solely on consent from FINRA does not address the need for inter-firm agreements and employee welfare. A verbal agreement lacks the necessary documentation to protect the rights and obligations of all parties involved, which could lead to misunderstandings or disputes. Therefore, the combination of a written agreement and consent from the employee's firm is the appropriate protocol for such arrangements.