What term describes using commingled funds as the broker's own money?

• A. Commingling
• B. Conversion
• C. Accountability
• D. Reasonable care

Answer: (B)

The situation tests understanding of misappropriation of client funds. When client money is mixed with a broker’s own funds, that’s commingling. Taking those commingled funds and using them as the broker’s own money goes beyond just mixing funds; it treats someone else’s property as if it were personal property. That act is conversion—the wrongful appropriation or use of someone else’s funds as if they belonged to you.

So, using commingled funds for personal use constitutes conversion because it involves actually depriving the clients of their funds and exercising ownership over them. It’s a serious breach of fiduciary duty and can lead to civil liability and disciplinary action. The other terms describe duties or standards (like keeping funds separate or acting with due care) rather than the act of unlawfully taking or using someone else’s property.