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SIE > Ch. 18 > Flashcards

Ch. 18 Flashcards

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1
Q

True or False: The findings of an arbitration panel may be appealed.

A

False. Arbitration decisions are final and binding.

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2
Q

Who should a client contact if she finds a discrepancy on her account statement?

A

She should contact her RR or ask to speak with the firm’s branch manager.

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3
Q

$_____ is the MSRB gift rule limitation.

A

$100 is the MSRB gift rule limitation (same as FINRA).

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4
Q

On what form does an employing BD report disciplinary actions?

A

Form U6

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5
Q

Define municipal finance professional (MFP).

A

An employee of a BD who is engaged in municipal business, solicits municipal business, or supervises other MFPs

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6
Q

True or False: Tickets valued at $500 given to four people are considered excessive.

A

True. The gift limit considers both the dollar value and number of intended recipients.

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7
Q

An individual may be out of the securities industry for up to _____ years before having to requalify.

A

2 years

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8
Q

If a mutual fund wholesaler gives away golf balls to BDs, is a record of the gift required to be kept?

A

Yes. BDs must record gifts given to ensure they do not violate the $100 limit per year.

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9
Q

The BrokerCheck system provides information on individuals who have been registered within the last __ years.

A

10 years

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10
Q

What is needed for an RR to receive compensation for selling limited partnership interests outside the scope of his BD?

A

1) Written notice to his employer, 2) Employer approval, and 3) Transaction recorded on the BD’s books

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11
Q

True or False: FINRA must approve all gifts in excess of $100.

A

False. FINRA approval is not required for gifts. Generally, gifts in excess of $100 are prohibited.

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12
Q

A client was screaming at an RR on the telephone. Is a record of this complaint required to be maintained?

A

No. Only records related to written complaints are required to be maintained.

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13
Q

What is required if an RR effects a transaction outside her BD, but does NOT receive compensation?

A

Written notice to her employer

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14
Q

What is the purpose of BrokerCheck?

A

To allow investors to obtain information about registered individuals in the securities industry

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15
Q

Is a $300 political contribution from a joint checking account a violation if the check is only signed by the MFP?

A

Yes. To avoid a violation, the check must be signed by both owners.

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16
Q

Form U4 requires an applicant to disclose her employment history and convictions covering the last ____ years.

A

10 years

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17
Q

__________________________ expenses are not subject to the Gift Rule.

A

Entertainment/business expenses are not subject to the Gift Rule.

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18
Q

Can a mutual fund distributor pay for a training conference?

A

Yes. As long as the location is appropriate, this is an acceptable practice.

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19
Q

May an RR have an outside job?

A

Yes, but she must notify her employer.

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20
Q

For how long may an RR leave the financial services industry without having to requalify?

A

2 years

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21
Q

A political contribution made from a joint checking account may exceed $250 if signed by ___________.

A

Both owners

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22
Q

If an individual’s registration is inactive for ____ years, he must requalify by examination.

A

2 years

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23
Q

Political contribution rules allow (Municipal Finance Professional) MFPs who may vote for a candidate to contribute a maximum of $_____ (per election).

A

$250

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24
Q

True or False: Failure to file a tax return would trigger an amendment to Form U4.

A

False

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25
Q

_____________ is when a RR effects a private securities transaction for a syndicator without telling his employer.

A

Selling Away

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26
Q

True or False: A gambling-related misdemeanor must be reported on Form U4.

A

Only gambling felonies

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27
Q

Is it acceptable for an RR of one BD to take an employee of another BD to an NFL game costing $300 per person?

A

Yes. If the RR attends with the recipient, it is considered a legitimate entertainment expense.

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28
Q

Upon receipt, to whom are written complaints forwarded?

A

Supervising principal

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29
Q

On termination of an RR’s employment, when must Form U5 be filed with FINRA and a copy provided to the RR?

A

Within 30 days

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30
Q

Would a civil lawsuit filed by a customer against an RR be reported on the RR’s Form U4?

A

Yes. Arbitration cases and civil lawsuits are reportable events.

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31
Q

If an RR is selling viatical policies on the side without his employer’s knowledge, he is guilty of _______________.

A

Selling Away

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32
Q

What form must be filed with FINRA at the time an associated person’s registration is terminated?

A

Form U5

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33
Q

A RR who leaves a member firm has ___ years to become employed by another FINRA firm before he must requalify by exam.

A

2 years

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34
Q

If a red flag event occurs, what steps must a principal take?

A

1) Investigate the situation, 2) document the investigation, and 3) pursue the investigation to a conclusion.

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35
Q

How often must clients be notified of the availability of the BrokerCheck system?

A

Annually

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36
Q

What is the industry policy regarding an RR who sets up an outside business that involves paid public speaking?

A

This is considered employment and the RR must provide notice to his or her employer.

37
Q

Political contribution rules allow MFPs NOT able to vote for a candidate to contribute a max. of $___ (per election).

A

$0

38
Q

FINRA members are required to file _________ statistical summaries regarding customer complaints.

A

Quarterly

39
Q

FINRA maintains information regarding RRs on the _______ system.

A

CRD System

40
Q

Where would a customer find information about the disciplinary history of a member firm and its RRs?

A

Public Disclosure Program (PDP), also known as BrokerCheck

41
Q

Sara, an RR of a BD, has recently been elected to the board of directors of a corporation. What is Sara required to do?

A

Provide her BD with written notification of her position on the board

42
Q

True or False: A gift in excess of $100 is allowed if given to a family member employed by another BD.

A

True. Gifts to family members are excluded from the Gift Limit Rule.

43
Q

A BD’s new applicant admits to a prior drug conviction (a misdemeanor). Is he subject to statutory disqualification?

A

No

44
Q

True or False: A registered person must be terminated if he is indicted for a statutory disqualification event.

A

False, only if convicted

45
Q

Due to the violation of a firm rule, Frank was fined $5,000 and suspended for three weeks. To whom is this reported?

A

Appropriate SRO (e.g., FINRA)

46
Q

A BD must file Form U5 with FINRA when a person’s association with that firm ______________.

A

Ends/ceases

47
Q

The $100 gift limit may be exceeded if the gift is given to a _______________.

A

Family member

48
Q

True or False: Firms must send to FINRA statistics and summary information regarding written customer complaints.

A

True

49
Q

If an RR is involved with a charity, does she need to provide written notification to her employer?

A

If compensation is not received, notification will NOT be required.

50
Q

Bill, an RR of High Mark Brokerage, has been hired as a bartender on the weekends. What step must Bill take with his BD?

A

Since Bill will be compensated as a bartender, he must provide written notice to his BD.

51
Q

Is it acceptable for a BD to give two tickets to a Broadway show (valued at $250) to an employee of another BD?

A

No. It is unacceptable. However, the gift limit would not be violated if the RR attends with the recipient.

52
Q

What is required of an employee seeking part-time employment outside of her brokerage firm?

A

Firm notification before the activity starts

53
Q

Omitting a _________ fact in an application or report to an SRO is grounds for statutory disqualification.

A

Material

54
Q

Gifts exceeding $_____ are considered excessive.

A

$100

55
Q

Hank, an RR, was charged with misdemeanor DUI last week. Is this reported to FINRA?

A

No, since it was a misdemeanor

56
Q

True or False: The manager of a syndicate giving each of its members a gift of $250 would violate the gift rule.

A

True. The maximum gift is $100 per person/per year and includes gifts between member firms.

57
Q

True or False: An associated person whose registration is terminated must sign Form U5.

A

False, signature is NOT required

58
Q

Dan, an RR of a BD, is the coach of his son’s Little League team. Must Dan notify his BD of his coaching position?

A

If no compensation is received (for hobbies or charitable service), written notification is NOT required.

59
Q

To whom are written or electronically-sent grievances (complaints) forwarded?

A

Supervisor

60
Q

What is the penalty for political contributions that violate the rule?

A

A two-year ban on obtaining negotiated underwriting business from the issuer

61
Q

___________ is FINRA’s tool for allowing public access to certain information found in the CRD.

A

BrokerCheck

62
Q

True or False: FINRA notification is NOT required if an associated person is disciplined by another SRO.

A

False. FINRA must be promptly notified of such disciplinary action.

63
Q

What should an RR do if she receives a written complaint?

A

Immediately forward it to her manager

64
Q

Do all outside activities of an RR require notification to an employer?

A

No. Notification is only required for employment activities, not hobbies.

65
Q

Hank, an RR, was arrested and charged with grand theft (a felony). Is this reported to FINRA?

A

Yes. Since the charge involves a felony, SRO notification is required.

66
Q

To apply for a securities license, one must file Form _____ with FINRA.

A

U4

67
Q

If an RR leaves a BD and later wants to return without being required to requalify, she must do so within ____ years.

A

2 years

68
Q

True or False: Any response provided to clients regarding a complaint must be in written form.

A

False; no requirement that responses be written

69
Q

If an RR plans to engage in outside activities and receive compensation, who must the RR notify?

A

The RR’s firm must receive prior written notification from a principal. Notification to regulators isn’t required.

70
Q

True or False: Complaints may be oral or written, including e-mail or text message.

A

False. A complaint is any written communication in which a customer complains about the activities of a member firm.

71
Q

What is the use of Form U6?

A

Form U6 reports disciplinary actions against registered representatives and firms, as well as final arbitration awards.

72
Q

If an associate requests a copy of his U5, how long does the member firm have to respond?

A

2 business days

73
Q

Form U5 is filed with FINRA within ____ days of resignation or termination of association with a member firm.

A

30 days

74
Q

Would a fine assessed by the CFTC (commodities-related) be reported on an RR’s Form U4?

A

Yes

75
Q

What is required of an RR participating in a private securities transaction where compensation is received?

A

Written approval and recording the transaction on the books of the firm

76
Q

Who is the associated person who primarily engages in or supervises municipal securities business?

A

Municipal Finance Professional (MFP)

77
Q

If a written complaint is received from a customer, what must be kept in the firm’s complaint file?

A

The original complaint, the firm’s response, as well as any action taken

78
Q

True or False: If a BD receives a written complaint from a client, it may be ignored if the complaint seems baseless.

A

False. Failing to respond to a formal written complaint is prohibited.

79
Q

What is required for an agent to receive compensation for effecting transactions outside his BD?

A

1) Written notice and response from, his employer, 2) Employer approval and 3) Transactions recorded on the BD’s books

80
Q

After resignation of registration, how long does FINRA’s jurisdiction last?

A

2 years

81
Q

What is the statute of limitations for arbitration?

A

6 years

82
Q

What is an MFP?

A

Municipal Finance Professional (those subject to political contribution rules)

83
Q

By signing Form U4, to what is a person agreeing in the event of an industry dispute?

A

His willingness to accept arbitration, rather than litigation, to settle a dispute

84
Q

Is an agent permitted to execute securities trades for compensation and not record the trades on his BD’s books and records?

A

No. This is referred to as “selling away.”

85
Q

Written customer complaints should be documented, investigated, and responded to by a __________.

A

Principal

86
Q

Define selling away.

A

The execution of transactions by an associated person outside his employment with a member firm

87
Q

True or False: An RR who is convicted for shoplifting is allowed to work for a member firm in an unregistered capacity.

A

False. An RR who is convicted for a statutory disqualification event is not allowed to work for a B/D in any capacity.

88
Q

What should a firm do if a customer complains that she has received a forged account statement?

A

Complaints alleging theft or forgery require an investigation and must be reported to FINRA within 30 calendar days.

SIE (20 decks)

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