Review safekeeping, segregation, good delivery, DRS, restricted legends, and securities handling controls tested on Series 99.
Custody and control questions ask whether the firm is actually protecting customer securities. This part of Series 99 covers safekeeping versus segregation, street name, stock records, physical counts, certificate validation, restricted and control legends, transfer procedures, and systems like DRS and DWAC. The Operations Professional is expected to understand not only where the security is, but also whether it can be moved, transferred, or delivered properly.
The exam often uses certificate details to test deeper control logic. A restricted legend, missing signature support, bad delivery, or lost certificate issue is not just a paperwork problem. It affects negotiability, transferability, and the firm’s ability to safeguard the asset while still processing the customer’s instruction correctly.
A useful test-day habit is to ask whether the security is safe, transferable, and properly documented. If any one of those fails, the custody-and-control issue usually outranks convenience.
A customer certificate bears a restrictive legend that has not yet been cleared for removal. What is the strongest operational conclusion?
A. The certificate may be treated like unrestricted street-name stock
B. The legend affects negotiability and transfer processing, so normal delivery cannot be assumed
C. Legends matter only for municipal securities
D. The firm may ignore the legend if the customer has held the certificate more than 30 days
Answer: B. Series 99 treats legends and restrictions as core custody-and-control issues. If a legend remains in place, the firm cannot assume ordinary negotiability or delivery treatment.