1. Registration of a Broker-Dealer Flashcards by Christopher Oglesby

Which form is used to register BRANCHES of a BD w the SEC?

Form BR

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Which form is used by a registered INVESTMENT ADVISOR to register with the SEC or state securities Administrator?

Form ADV

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Which form is used by BDs to submit a request to terminate their SEC registration or FINRA membership?

Within how many days post Form BD must the form be filed?

Form BDW

Must be filed within 30 days of Form BD submission

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What is a written description of a BD’s operational and internal control systems?

Written Supervisory Procedures or WSPs

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Which form is used to apply for initial FINRA membership?

What’s required on the form?

How long does FINRA have to review once substantially complete?

1) Form NMA (New Member Application)

2)
Application fee of $500
Fingerprint cards
Market making activities
Trial balance aged 30 days

180 CALENDAR days

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Which form is used by BDs to apply for SEC registration?

Form BD submitted via the Central Registration Depository (CRD)

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What is FINRA’s central licensing and registration database for the securities industry?

CRD (Web CRD) or Central Registration Depository, which contains the registration records of BDs and their associated persons

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How often BDs must notify customers about the existence of the BrokerCheck hotline and website?

At least once per year

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What is the FINRA website on which the public can find info about a registered rep’s employment history and securities licenses?

BrokerCheck

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Where the data made available to the public on FINRA’s BrokerCheck website is stored?

Is all of the data publicly available?

On FINRA’s Central Registration Depository (web CRD)

BrokerCheck contains a limited set of CRD data; full CRD Data is only available to firms and regulators, not the public

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BrokerCheck provides a full report on individuals who have been securities-registered within…(what time period)

Last 10 years

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Who may access FINRA’s Central Registration Depository (WebCRD)?

Only firms and regulators, not the public. A LIMITED set of CRD data is available to the public on BrokerCheck

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Which types of CRD data on registered persons the public can access on BrokerCheck?

Qualifications, employment history and disciplinary actions

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On BrokerCheck, a member of the public can check a broker’s employment history over what period of time?

the last 10 years, as reported on broker’s form U4

Both full and part time employment, inside and outside the securities industry, are reported on BrokerCheck

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For a registered rep who participates as a reserve in the Army National Guard, FINRA dues and assessments are waived if…

The rep is called to active military duty. Reserve duty ALONE does NOT impact FINRA dues, assessments or CE requirements

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When is a BD required to provide a FINRA website address on its website?

When is discloses on the website that it is a FINRA member

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When must a BD’s Business Continuity Plan (BCP) be provided to a member of FINRA’s staff?

Promptly upon request

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For BDs, the main advantage of adopting a risk-based system of compliance review is…

Efficiency. Because the system focuses on those areas posing the greatest potential risks, each and every transaction does not need to be compliance-reviewed

Under FINRA 3110, the person who is required to review all investment banking and securities transactions for compliance is…

A registered principal (S24)

This Act protects customers from the bankruptcy or financial failure of BDs

Securities Investor Protection Act (SIPA)

What is the maximum coverage per account with a Securities Investor Protection Corporation (SIPC)?

$500k

What is the maximum amount of cash claims per account with a Securities Investor Protection Corporation (SIPC)?

$250k

What is the role of General Partner in a Limited Partnership?

Manages day-to-day operations, potentially has unlimited personal liability

What is the role of Limited Partner in a Limited Partnership?

Silent partner; has limited liability

What are the registration steps with FINRA for a BD?

1. Submit a new member application (via Form NMA) to FINRA 2. Pre-membership interview (btwn BD and FINRA) 3. 30 Day Waiting Period (Once deemed complete application) 4. Approval to conduct securities business (can be qualified) Note - if FINRA needs more information, members have 60 days to provide

How many principals must a new BD applicant have?

two (S24) supervisory (One of whom is a member of senior management) One financial One operations principal NOTE - sole proprietorships only need one supervisory principal

Upon SEC registration, after what period will FINRA inspect a BD for net capital compliance?

6 months

Upon SEC registration, after what period will FINRA inspect a BD for GENERAL compliance?

One year

What conditions will result in Statutory Disqualification of a BD w FINRA?

1) Expelled or suspended parties by another self regulatory organization 2) Subject to an SEC order denying , suspending or revoking registration 3) That willfully filed a false application for membership

How many standards of membership must potential BDs adhere to under FINRA?

Must adhere to 14 standards of membership

What is the definition of a broker dealer (BD)?

Any person effecting securities transactions

What is the definition of an investment advisor?

any person who sells investment related ADVICE

A branch office that relocates must notify FINRA in how many days?

30 days

If FINRA determines that a BD has not commenced business operations within 6 months of SEC registration, its net capital compliance inspection will be delayed how long?

6 months

If a BD fails and SIPC takes over customer claims / return of assets, how are accounts valued?

Based on the market value of the securities as of the court filing date

True / false: the SIPC covers investors if an ISSUER commits fraud

false - SIPC covers only if a BD is insolvent or a BD commits fraudulent activity and uses investor funds

What types of accounts are NOT covered by SIPC?

1) commodities 2) futures accounts 3) accounts of senior officers and directors of BD 4) long market value in a margin account (although equity is covered)

What types of BDs are EXEMPT from SIPC membership?

1) firms whose principal business is conducted outside of the US and territories 2) firms who JUST distributes shares of a) mutual funds, b) unit investment trusts or c) insurance products (e.g., variable annuities)

For new BDs how long does it have to report during the 180 day review process changes or amendments to its file?

Within 30 days of becoming aware of info that would cause an amendment

What type of account is not segregated from a cash account for SIPC coverage?

margin account

What is a “person”?

1) any legal entity 2) natural person NOT under custodial care of others, guardianship, deceased

Who can be an investment advisor?

1) a natural person or 2) legal entity other than trust

What is the principal duty of the SEC?

maintain fair, orderly and efficient markets