In which scenario does a broker demonstrate comingling?

A broker demonstrates comingling by including client funds in a joint account with their own funds. Comingling refers specifically to the improper mixing of personal and client funds, which breaches fiduciary duty and regulatory requirements. When a broker combines these funds, it becomes difficult to identify which funds belong to clients and which are personal, potentially leading to mismanagement or misuse of those funds.

In contrast, depositing funds into a proper escrow account maintains the required separation of client funds from personal funds, thus complying with ethical and legal standards. Similarly, maintaining separate accounts for each client aligns with best practices by ensuring all client funds are accounted for individually and safeguarded. Using client funds for business expenses signifies a misuse of funds, but it does not technically fall under the definition of comingling unless those funds were integrated into the broker's personal accounts. Thus, the scenario that illustrates comingling most clearly is the mixing of client funds with the broker's own in a joint account.