Ch 4 Deck 3 Flashcards
Events that prevent a person from being registered or losing membership (I think both)
Statutory Disqualification
One reason for Statutory Disqualification is having been barred, suspended or expelled from
membership in an SRO, including FINRA
One reason for Statutory Disqualification is if the SEC has
denied, suspended or revoked the application
One reason for Statutory Disqualification is Associating with a person who has been
- Barred, suspended, or expelled from membership in an SRO, including FINRA
- SEC has denied, suspended or revoked the application
One reason for Statutory Disqualification is filing
false or misleading facts on an application
One reason for Statutory Disqualification is within the last 10 years, having
prior felony convictions or securities-related
misdemeanors
One reason for Statutory Disqualification is Receiving prior
disciplinary orders of the Administrator
One reason for Statutory Disqualification is having willfully
violated securities laws
One reason for Statutory Disqualification is a failure to supervise
others who violated securities law
Once the firm becomes aware of a statutory disqualifying event, the firm must report it
to FINRA within 30 days of learning of the action.
If a person is subject to statutory disqualification, The firm must either
terminate the representative
or
Allow the person to continue working
If a person is subject to statutory disqualification, and the firm wishes to Allow the person to continue working, they must
file a MC-400
AND an amended U-4
If a person is subject to statutory disqualification, In most cases, if the firm and FINRA agree, the person can continue to work
in a ministerial or clerical position.
If a person is subject to statutory disqualification, and the firm wishes to Allow the person to continue working the MC-400 form and amended U-4 must be filed within
10 days of learning of the action.
Each member firm must set up a supervisory system that is
capable of managing reps’ activities.
Firm supervisory system must include written procedures in place to
achieve compliance and detect rule violations
Firm supervisory system must designate registered principals who will
enforce the written supervisory procedures
Firm supervisory system must identify which
principal is responsible for which procedure in a designation record
Firm supervisory system must report to FINRA
who the principals in the designation record are
Firm supervisory system must keep
The designation record for at least 6 years.
Firm supervisory system must Designate certain offices as
offices of supervisory jurisdiction (OSJ)
Firm supervisory system Assign to each representative
a principal for supervision
OSJ Activities include order
execution and market making
OSJ Activities include structuring of
public offerings or private placements
OSJ Activities include Final approval, review and endorsement of
customer orders
OSJ Activities include Final approval of new
accounts
OSJ Activities include Final approval of literature for
advertising or sales (recently changed to retail communications)
OSJ Activities include supervision of
persons at branch offices
The main office is always considered
an OSJ
For each non-OSJ branch office, There must be at least one
registered representative or principal
For each OSJ, There must be at least one
registered principal that is responsible for it
Do all misdemeanors count for statutory disqualification?
No just securities related misdemeanors
Any location where associated employees are soliciting or effecting (but not executing) purchases or sales of securities
branch office
Office responsible for supervising the activities of employees at one or more non-branch locations of the member firm
branch office
A branch office is not the primary
residence of the RR
The residence of the RR is a branch office if meetings
with customers take place there
the residence of the RR is a branch office if non-
family members work there
A branch office is not a location other than the primary residence that is used less than
30 business days annually (vacation home)
A branch office is not an office location established solely for customer
service with no sales activities
A branch office is not a location established for back
office functions where no sales are begin conducted
Each RR and Principal must participate in an annual
compliance meeting
Group size for annual compliance meeting
individually or as a group
purpose of annual compliance meeting
keep RR’s and principals up to date
annual compliance meeting must cover
compliance matters
annual compliance meeting documentation includes
who must attend
who attended
