Which statement best describes an associated person of a FINRA member firm for registration purposes?
- AAny retail customer who has opened a securities account and placed at least one trade with the member firm
- BOnly a registered principal who supervises the firm's producing representatives and approves new accounts
- CA natural person engaged in the investment banking or securities business who is controlled by, controlling, or under common control with the member firm Correct
- DAn outside vendor that provides software services to the firm under a written commercial contract
Why A is wrong: This is tempting because customers interact closely with the firm, but a customer is a client of the firm, not a person engaged in and controlled by the firm's securities business, so this is wrong.
Why B is wrong: Principals are associated persons, but the term is far broader than principals alone, so limiting it to supervisors describes only one subset and is wrong.
Why C is correct: This captures the definition used by FINRA: an associated person is an individual involved in the securities business of the firm through a control relationship, which is why such persons must register unless a specific exclusion applies.
Why D is wrong: A vendor may support the firm, but it is a separate business rather than a person engaged in the securities business under the firm's control, so it does not meet the definition.