What is a broker required to do with client funds received?

A broker is required to deposit client funds into a trust account to ensure the safekeeping of those funds until they are needed for a specific purpose, such as closing a transaction. This requirement is in place to protect clients' money and provide a clear distinction between the broker's personal funds and those belonging to clients.

Trust accounts serve as a secure holding place for money, maintaining accountability and preventing misuse. Brokers must ensure that these funds are handled with care in accordance with legal obligations and ethical standards, abiding by the regulations set forth by the state. This practice helps to foster trust between clients and their brokers, as it demonstrates a commitment to the appropriate handling of client assets. Investing client funds or using them for office expenses would violate the law and potentially compromise the client's interests, while holding cash could lead to mismanagement or loss. Therefore, the proper action is always to deposit client funds into a designated trust account.