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
A qualified retirement plan with 75 participants and total assets of $20 million qualifies as an institutional customer under FINRA rules due to its size and structure, which typically involves professional management and a significant amount of assets.
A) The spouse of a registered representative
This option is incorrect as a spouse of a registered representative does not meet the criteria for institutional customers set by FINRA. Institutional customers are typically larger entities such as corporations or investment firms, rather than individuals related to registered representatives.
B) A state-registered investment advisory firm
While a state-registered investment advisory firm may manage significant assets, it does not fit the definition of institutional customers as defined by FINRA rules unless it meets specific thresholds regarding the assets under management or the nature of its business.
C) An individual with a net worth of $25 million
This option is incorrect because an individual, regardless of their net worth, does not qualify as an institutional customer under FINRA rules. Institutional customers are recognized as entities rather than individuals, even if they possess substantial personal wealth.
D) A qualified retirement plan with 75 participants and total assets of $20 million
This option is correct as it represents an institutional customer according to FINRA rules. The plan's size and the number of participants indicate that it is managed professionally and is involved in the collective investment of assets, fitting the institutional customer definition.
Conclusion
The correct answer, a qualified retirement plan with 75 participants and total assets of $20 million, clearly meets the criteria for institutional customers under FINRA rules due to its scale and structure. All other options fail to meet these criteria, either being individuals or entities that do not satisfy the necessary thresholds for institutional classification.