Under what condition can a registered representative share in the profits and losses of a customer's account?

A registered representative can share in the profits and losses of a customer's account when there is written consent from both the firm and the customer. This requirement is in place to ensure that there is a formal agreement in place that outlines the terms of the sharing arrangement. The firm needs to be involved to maintain ethical standards and compliance with regulatory guidelines, protecting both the representative and the customer.

The requirement for this written consent helps to prevent any potential conflicts of interest or misunderstandings regarding the financial relationship between the representative and the customer. It also limits the practice to situations where both parties have a clear understanding and agreement on how profits and losses will be shared, ensuring transparency and accountability.

While verbal agreements and requests from customers might suggest an informal arrangement, they do not meet the necessary compliance standards set by regulatory authorities. Additionally, familial relationships do not automatically grant permission for sharing in profits and losses without the proper documentation and consent from the involved parties.