Arbitration questions Flashcards
Industry Cases means…
Between member FIrms and APs
like…
merryl and Smith barney going at it…
I don’t know why…
nor what Non-public and public means!
doesnt matter why–
we don’t make the rules. Just know how it works.
who care what it means… just recognize how many is needed in the Offensive vs defensive scenarios.
For Between Member firms:
If 1 arbitrator… then it is going to be a…
Non-public arbitrator.
it’s between Members…kinda an “inside” thing
For Between Member firms:
If 3 arbitrators needed… so you need 3.
They are going to be?
1 Non-public arbitrators.
2 public arbitrators.
Between AP and Members:
1 arbitrator will be a
PUBLIC arbitrators, just 1.
1:1
Between Members and AP: M. AP.
3 arbitrators
3 arbitrators total 1NP2P
1 non public.
2 public,
3:3
ANNOYING!
Between customer cases- (involving clients)
if 1 arbitrator then
1 public arbitrator
SUPER ANNOYING…
Between customer cases-
(involving clients)
if 3 arbitrators are needed, then….
3 total!
1 public
1 non-public
1 Finra chairpson -rostered– (they pick)
If you need 1 arbitrator… between customer case, then you’d need what type of arbitrator?
Public arbitrator (cuz its “openly”/public with a customer….
If you need 3 arbitrators in a customer case…you’ll need who?
3 total!
1 public
1 non-public
1 Finra chairpson -rostered– (they pick)
What is there is discrimination (of race, ethnic background)? Or harrasement– sexual nature?
Then go straight to court system, no arbitration. This is severe.
Why is arbitration used?
It’s cheaper, and nearly impossible to appeal arbitration outside of a significant abuse of the system.
What is there is discrimination (of race, ethnic background)? Or harassment– sexual nature?
Then go straight to court system, no arbitration. This is severe.
Is there a way to appeal after arbitration?
No, all decisions are binding.
Networking with Members and FInancial Institutions… like at banks… you’ll see
A sign that they are not covered under the FDIC; and subject to market risk.
you can be SPIC covered as an investor.
you could lose the principal.
What is 15g-4 disclosure?
Disclosure must be disclose of compensation to Brokers or Dealers. they must tell you the aggregate amount of compensation – the
Broker’s Cut.
15g-4 identifies what? at the FInancial banks—
Must be a disclosure of compensation to Brokers or Dealers. they must tell you the aggregate amount of compensation – the
Broker’s Cut.
Prohibitions
unless it is registristered or exeption from registration, you can’t sell, solicit, recommend, or advertise.
Taping rules
Firm hiring a lg # of new reps from a disciplined firm, maybe they learned some bad habits– and you’ll have to tape them.
How many days from notifcation of taping requiremnet to reduce staffing?
30 days to fire 1 of them– to avoid the taping….
I can’t hire the other 4….waiting.
Let’s say we had 100 reps, from a disciplined firm…you can’t hire more than 20%… (20 people).
The entire coded people…
60 days from notification to start taping…
30 days to fire
can’t rehire for 180 days.
What’s the main points for testing regarding Taping rules?
60 days from notification to start taping…their prospecting.
30 days to fire
can’t rehire (someone that was fired) for 180 days.
When ever a rep is trying to transfer assets from the old company to the new company, the new Company must make sure…
The former customers are given in paper or electronic form– education materials, prepared by FINRA.
(Make sure the transer is appropriate, not to generate new commissions at the NEW member firm.)
unethical practices can include…
prices that are excessively higher or lower to create false activity.
What is a Wash Trade/Matched Orders
Buy a security, then immedicate somewhere else selling the exact same one…
BD’s doing favors for each other…
(Under the table commissions). NOT GOOD.
Churning
Excessive trading in the account.
–selling with purpose of commissions–
No spreading…
Roomers… (pump and dump)
No one can commit fraud in any way.
no stealing/committing forgery.
Financial Exploitation of Specific Adults–
(65+ or adult aged-mentally or physically impaired).
The idea is to ________the customer.
Protect.
The member is required to try and act in the best interest of the adult.
Temporary hold on disbursements, increased supervision of account activity, and making sure contact information for a trusted advisor/adult of the client is on file.
If you make reference that the government or the FDIC, or the SEC has guaranteed/sponsored/recommended/approaved by US or any agency thereof, or guaranteed by a bank……that is a ______.
CRIME! do not do this!
Not good.
35d-1
Investment Company Names…
Can’t imply guaranteed!
and the Naming rule….
If your Name of the fund is a Bond Fund for example…then 80% must be bonds.
example if Small Cap Growth.. then 80% must be Small Cap funds.
Fiduciary duty:
highest leagal care.
Must by law, act in the best interest of teh stated beneficiary of the account.
Primer Brokerage accounts:
deal in special accounts like hedge funds…
they are provided to large institutions (hedge funds, market specialist, mutual fund managers) with complicated financial needs.
Advisors get paid a…
Fee
Community Property account
Marital property – law of division of assets.
Unincorporated assosciations–
Groups of people are not another type of structure.
ERISA
Employee Retirement Income Securities Act
ERISA – have qualified plans. and must follow the guidelines.
No discrimination of (highly compensated employees and lower paid employees).
What is the requirement for ERISA
1:1:1
1 yr of employement
1000 hours
21 yrs old.
then they can participate.
What’s qualified money
Money that has not been taxed yet. It’s growing taxed deferred. (so you won’t pay tax until you pull the money out.)
when you pull it out, ALL of it will be taxed.
No cost Basis
All the after tax dollars you put in the account.
zero cost basis– means you paid 0 tax on that money.
NON-Qualified plans
Those plans that the money has already been taxed.
You only pay money on the growth.
What’s an example of Non-qualified plan?
Like…deffered compensation or 457 plans.
Transfer
Moving employee tax deferred retirement account into an IRA. NOT TAXABLE.
the client never holds the money.
this is like a 401K to an IRA.
Roll Over
With in 60 days from one IRA custodian to another IRA Custodian.
Roll Overs can only happen every…
rolling 12 months.
Qualified Plans
those with TAX DEDUCTIBLE Contributions but are 100% taxable upon withdrawl as ordinary income.
Money goes in BEFORE TAX….
what penalty is given if you pull out your money before 59 1/2.
10%.
What types of retirement acccounts have a penality?
All retirement plans…
Annuities
IRA
Employer Sponsored Qualified Plans: 401Ks)
there are exceptions.
All qualified money is subject to…
RMD.
How old must you be to take out the RMD
- (it just changed)
What retirement plan do not have the RMD?
Roth IRA
because you already paid taxes before it went in.
IF you don’t take all you money out (RMD) by age 72 [and by april 1st during your 72nd birthday,] what whopping penalty do you get?
Nasty gram…
IRS says you need to pull out the rest of your money.
If you don’t pull it out… you’ll pay an additional 50%
What’s so special about IRA Roth
You get tax free money…
If you hold your account for 5 yrs and
don’t withdrawl until 59 1/2.
THen ALL _– your $, and your capital gains is tax free!!!!!
Penalty free withdrawls
first time home buyer
up to 10K from your Roth–
up to 5K at any age for a child:
qualified education: ALL you money- at any age.
Disabled owner– at any age.
RMD does not apply.
cuz you already paid tax before putting it in the account.
401Ks have to match?
No they don’t.
401ks pick where the money goes in a fund
True
Part Time Employees must also be included for 401K plans. how do they qualify?
21 yrs old
500 hours a year
worked for at least last 3 years.
401K plans still have RMD at 72– penality applies
10% penalty.
All withdrawls are taable.
403 (b) also known as…
TSA: tax sheltered Annuity.
403 (B) are pre-tax contributios.. just like
401Ks.
what organizations use 403(b)?
Pulic school employees, non-profit hospitals, and churches.
Same RMDs and penalties.
All withdrawls are taxable.
What does SEP IRA
Simplified
Employee
Pension
Plan.
what are the eligibility rules for the SEP IRA?
21 yrs old
worked for same employer 3 out of the last 5 yrs
Has received IRSS Requirement (Small amt incompensation from the employer)
Employer contribution only.
Deferred Compensation Plan
Defines the Benefit
Pensions
Defined Contribution
Do you know what you’re contribution plan… like a 401K…
Qualified
have not been taxed
Non-qualified
Yes, they have been taxed already. (you put money in from your checking…it’s already been taxed!)
Traditional
Tax Deductible
deferred..
In the future!
Deduction
if I make 40K a year; and I contribute 3K to a Roth. I am taxed as if I made 40K ayr.
If i put it in a Traditional… I get to reduce the amount of income I am taxed on. So now I only get taxed on 37K instead of 40K.
SEP IRA…who can put money in the account?
Only the employeer.
Simple IRA:
Small business plans.
No more than 100 eligible employees.
who is elegible for the SIMPLE IRA?
if you make $5000 during the previous year.
For the Simple IRA plan…Employer must contribute by either…
2% method or
3% $ for $ match
How are employees vested?
They are immediately 100% vested on employer’s contributions.—
so if you quite– you walk away with all the money
ROTH 401K
combo between roth and a 401K.
Some tax deductible
some non-tax deductible.
No income Limits
who are Roth 401K plans for?
Self-Employed Persons.
No Income Limit.
RMD rules apply– cuz of the taxable portion with the 401K
Stock Options and Purchase Plans
Highly paid employees–
Employees of publicly traded companies may have the ability to purchase stock. so how does that work?
Deduct it from your check, put it in an escrow, and at certain periods buys stock.
have hold periods.
S-P regulation stands for…
Secretcy and Privacy.
Must be provided at the time of sale. YOU HAVE TO.
must be simple to opt out.
It must be….sent how often?________
annually sent from the company.
