60. Which of the following parties is an institutional customer under FINRA rules?
Answer: D
A qualified retirement plan with 75 participants and total assets of $20 million
An institutional customer under FINRA rules includes entities such as qualified retirement plans with significant assets. A qualified retirement plan with 75 participants and total assets of $20 million fits this definition due to its institutional characteristics.
A) The spouse of a registered representative
This option is incorrect as the spouse of a registered representative does not qualify as an institutional customer. Institutional customers are typically organizations or entities that engage in significant investment activities, whereas individuals, including spouses, do not meet this criterion.
B) A state-registered investment advisory firm
While a state-registered investment advisory firm is a professional entity that may engage in investment activities, it is not classified as an institutional customer under FINRA rules. Institutional customers are primarily defined by their asset size and nature of their investment activities, which this option does not clearly fulfill.
C) An individual with a net worth of $25 million
An individual with a net worth of $25 million is classified as a wealthy individual but does not meet the definition of an institutional customer. Institutional customers are typically organizations or large entities rather than individual investors, regardless of their net worth.
D) A qualified retirement plan with 75 participants and total assets of $20 million
This option is correct as it represents an institutional customer under FINRA rules. The number of participants and the significant total assets indicate that this qualified retirement plan operates on a scale that qualifies it as an institutional entity.
Conclusion
The correct answer, a qualified retirement plan with 75 participants and total assets of $20 million, is the only option that meets the definition of an institutional customer as per FINRA regulations. All other options represent individuals or entities that do not fit the institutional profile, thereby affirming the distinction necessary to identify institutional customers accurately.