FINRA Rule 2150 permits a registered representative (RR) to share in the profits and losses of a customer's account under specific conditions. The arrangement requires prior written authorization from both the member firm and the customer. Crucially, the rule mandates that any sharing of profits and losses must be in direct proportion to the financial contributions made by the RR and the customer. This ensures that the RR's participation is based on their own capital at risk, aligning their interests with the customer's in a fair and transparent manner.

A. Only when the customer is an accredited investor: A customer's status as an accredited investor is irrelevant to the rules governing an RR sharing in their account.

B. Only if the RR’s firm is also a participant in the sharing arrangement: The firm must provide prior written authorization for the arrangement, but it is not required to be a participant.

D. Under no circumstances: This is incorrect, as FINRA Rule 2150 explicitly outlines the specific, limited circumstances under which sharing is permitted.

1. FINRA Rule 2150. Improper Use of Customers' Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts.

Reference: Section (a)(2)(C) states that sharing is permitted if "the associated person and the customer share in the profits or losses in the account in direct proportion to the financial contributions made to the account by either the associated person or the customer."

2. Georgetown University Law Center. (2022). Securities Regulation: Course Materials.

Reference: In discussions on broker-dealer conduct rules, materials on FINRA Rule 2150 emphasize that "proportionate contribution is a cornerstone of permissible account sharing, designed to prevent conflicts of interest where a representative might otherwise benefit without having personal funds at risk." (Syllabus, Module on Broker-Dealer Regulation).

3. U.S. Securities and Exchange Commission. (2018). Study Regarding the Financial Literacy of Investors.

Reference: Appendix B, "Summary of Key Investor Protection Rules," discusses FINRA Rule 2150, noting that the proportionality requirement is a key safeguard to ensure that a representative's interests are aligned with the customer's through shared financial risk.