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Series 10 > Chapter 01 : Registration and Supervision > Flashcards

Chapter 01 : Registration and Supervision Flashcards

1
Q

Identify the acronym: SRO

A

Self-Regulatory Organization (such as FINRA)

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2
Q

What must be done by the carrying firm when opening an account for an employee of another Finra member firm?

A

The carrying firm must receive written consent from the employer

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3
Q

Hearing Panel findings may be appealed to the ___________________________,then the _____, and then ________________.

A

Hearing Panel findings may be appealed to the National Adjudicatory Council (NAC), then the SEC, and then federal court.

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4
Q

What is the continuing education (CE) requirement of an RR who is currently serving in the military?

A

His registration is in Special Inactive Status and the CE requirement is halted.

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5
Q

May a Series 6 registered person engage in the sale of closed-end funds?

A

Only if the product is being sold in a primary (new issue) distribution.

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6
Q

May FINRA send an RR to prison?

A

No

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7
Q

What is FINRA?

A

The Financial Industry Regulatory Authority; created by the merger of the NASD and NYSE regulatory authorities

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8
Q

True or False: A person whose registration is terminated is still subject to FINRA jurisdiction for two years.

A

True

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9
Q

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

A

Form U5 is filed with FINRA within 30 days of resignation or termination of association with a member firm.

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10
Q

List some of the items found on an associated person’s Form U4.

A

Personal data, address, 10-year employment history, personal bankruptcy within the last 10 years, SEC or SRO discipline

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11
Q

Jill, an RR, leaves her BD and takes a position with a new BD. Is she again subject to the fingerprinting requirement?

A

Yes

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12
Q

What is the statute of limitations for arbitration?

A

6 years

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13
Q

True or False: An office established as a back-up, to be used during emergency situations, is a branch office.

A

False. A temporary office used as part of a BD’s contingency plan is not considered a branch office.

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14
Q

Within a firm, who performs the supervisory functions as they pertain to options?

A

The Registered Options Principal (ROP)

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15
Q

If a municipal representative is convicted for forgery, it would be reported to ______.

A

If a municipal representative is convicted for forgery, it would be reported to FINRA.

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16
Q

What are the justifiable reasons for denying an individual’s registration?

A

Conviction for any felony or securities-related misdemeanor within the last 10 years

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17
Q

True or False: A Series 6 representative may only engage in primary market offerings.

A

True

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18
Q

A producing branch manager must be supervised by someone who is _______ to, and ____________ of, that manager.

A

A producing branch manager must be supervised by someone who is senior to, and independent of, that manager.

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19
Q

If not registered with a firm during military service, when does an RR’s two-year expiration clock begin counting down?

A

90 days after military discharge

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20
Q

True or False: Four gifts, valued at $30 each, given to one person would be excessive.

A

True. Since gifts are aggregated, the $100 limit would be exceeded.

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21
Q

May a Series 6 registered person engage in option trades?

A

No

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22
Q

True or False: Blue-Sky Laws apply to broker-dealers and agents operating within a state.

A

True

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23
Q

May a customer be forced to use arbitration?

A

No, but signed pre-dispute arbitration agreements are binding.

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24
Q

True or False: A non-OSJ branch office may be supervised by either a registered representative or a principal.

A

True. Firms may use a principal or designate one of the RRs to be in charge.

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25
Q

How often are registered personnel required to participate in a compliance meeting?

A

Annually

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26
Q

True or False: Rule violations are handled by the Code of Arbitration.

A

False. Rule violations are covered by the Code of Procedure.

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27
Q

What is an RR’s concern if her client moves to a new state?

A

Ensuring that the RR is properly registered in the new state (Uniform Securities Act)

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28
Q

True or False: RRs currently serving in the military can receive a CE waiver.

A

True

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29
Q

When a minor dispute is handled through simplified arbitration, is the ruling final and binding?

A

Yes, all arbitration decisions are final.

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30
Q

True or False: Decisions arising from arbitration may be appealed to the federal court system.

A

False. Decisions are binding on both parties and may NOT be appealed.

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31
Q

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

A

Firm notification before the activity starts

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32
Q

True or False: The Code of Procedure can be used by a customer against a member firm to resolve a monetary dispute.

A

False. This situation would be handled under the Code of Arbitration.

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33
Q

Ben terminates his registration with his BD. If hired by another BD, when must the firm review his Form U5?

A

Within 60 days of Ben’s filing of a new Form U4

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34
Q

A location effects fewer than 25 securities trades annually. What is this location considered?

A

A non-branch location

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35
Q

What rules govern the registration of an issue in any state in which it will be offered?

A

Blue-Sky Laws

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36
Q

What two types of securities registrations would allow an individual to offer variable annuities?

A

Series 6 or Series 7

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37
Q

How can a client access information maintained on the Central Registration Depository (CRD)?

A

Either through a toll-free number or through FINRA’s Web site.

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38
Q

__________________________ expenses are not subject to the Gift Rule.

A

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

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39
Q

What products may be sold by a municipal securities representative?

A

Municipal bonds and 529 plans, but NOT municipal bond funds

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40
Q

What types of employment disputes may be settled through the court system, rather than using arbitration?

A

Employment discrimination and sexual harassment disputes

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41
Q

A branch office must be inspected every ____________.

A

A branch office must be inspected every three years.

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42
Q

A client sends a letter to his BD alleging unsuitable recommendations. What is the letter and what steps are taken?

A

The letter is a written complaint and must be reviewed by a principal. Firms submit periodic complaint reports to FINRA.

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43
Q

Under the Code of Procedure, a sanction becomes effective ____ days after the firm has received final notice.

A

Under the Code of Procedure, a sanction becomes effective 30 days after the firm has received final notice.

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44
Q

A representative works from and meets clients at his home. What is the RR’s residence considered?

A

A branch office

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45
Q

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

A

2 years

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46
Q

Any fine against an RR for greater than $______ must be reported to _______.

A

Any fine against an RR for greater than $2,500 must be reported to FINRA.

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47
Q

How many days are representatives given to complete the Regulatory Element of Continuing Education?

A

120 days from the anniversary date of their initial securities registration

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48
Q

List two activities that non-registered personnel may perform.

A

Sending invitations to company-sponsored events and distributing retail communication

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49
Q

Is a Series 9/10 registration sufficient to manage a brokerage underwriting department?

A

No. A Series 24 is required for general securities underwriting, while Series 53 is required for municipal underwriting.

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50
Q

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

A

To apply for a securities license, one must file Form U4 with FINRA.

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51
Q

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

A

Two years

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52
Q

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

A

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

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53
Q

May an RR have an outside job?

A

Yes, but she must notify her employer.

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54
Q

Firm Element continuing education is subject to ______________ to show completion, but not ________ with FINRA.

A

Firm Element continuing education is subject to recordkeeping to show completion, but not filing with FINRA.

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55
Q

What is the maximum fine that may be imposed by FINRA?v

A

Unlimited

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56
Q

Upon receiving a second notice from the Dept. of Enforcement regarding a complaint, firms must respond within ____ days.

A

Upon receiving a second notice from the Dept. of Enforcement regarding a complaint, firms must respond within 14 days.

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57
Q

True or False: RRs serving in the military may receive commissions.

A

True. However, the RR’s clients’ accounts will be serviced by another RR.

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58
Q

Generally, how are minor rule violations handled?

A

A sanction/fine is offered, with the respondent accepting the offer and waiving his right to an appeal.

59
Q

What actions may the hearing panel take regarding rule violations?

A

Censure, fine, suspension, request to requalify, or expulsion of the respondent

60
Q

True or False: Form U4 provides information regarding the schools the associated person has attended.

A

False

61
Q

Simplified arbitration may be used if a dispute does not exceed $_______.

A

Simplified arbitration may be used if a dispute does not exceed $50,000.

62
Q

May an RR force a client into an arbitration proceeding?

A

No. Clients are not bound by arbitration unless they have given prior consent.

63
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.

64
Q

Simplified arbitration procedures are used for monetary disputes not exceeding $__________.

A

Simplified arbitration procedures are used for monetary disputes not exceeding $50,000.

65
Q

What is the name of a location used occasionally, and always by appointment, to meet with customers?

A

An office of convenience

66
Q

From a registration standpoint, what may be the result of a DUI felony conviction?

A

Statutory disqualification

67
Q

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

A

False

68
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

69
Q

Trades executed outside the scope of an RR’s employment with a BD are known as ___________________ transactions.

A

Trades executed outside the scope of an RR’s employment with a BD are known as private securities transactions.

70
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

71
Q

True or False: Predispute Arbitration Agreements may limit awards.

A

False

72
Q

FINRA maintains information regarding RRs on the _______ system.

A

FINRA maintains information regarding RRs on the CRD (Central Registration Depository) system.

73
Q

As it relates to securities law, what does the acronym USA mean?

A

The Uniform Securities Act, also known as the blue-sky laws

74
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.

75
Q

Identify the acronym: CRD

A

Central Registration Depository

76
Q

The hearing panel may not impose a ___________________ due to rule violations.

A

The hearing panel may not impose a prison sentence due to rule violations.

77
Q

True or False: FINRA regulates accounts of member firm employees opened at another firm.

A

True. The rule also covers accounts for the employee’s spouse or dependent children.

78
Q

True or False: Firm Element CE must be completed every three years after initial qualification.

A

False. Participation in firm element CE is an annual requirement.

79
Q

When must RRs complete the Regulatory Element of Continuing Education?

A

On the 2-year anniversary of their registration and every 3 years thereafter.

80
Q

True or False: Firm Element Continuing Education requires BDs to update employees on job and product-related subjects.

A

True

81
Q

For accounts opened for employees of another member firm, what is provided to the individual’s employer upon request?

A

Duplicate confirmations and statements

82
Q

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

A

Immediately forward it to her manager

83
Q

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

A

Response must be made within 2 business days of request.

84
Q

Identify the acronym: COP

A

Code of Procedure

85
Q

What type of compensation may a Series 11 representative receive?

A

Wage, salary, bonus, but not commissions

86
Q

Whose approval is required before changing or updating customer account information?

A

A supervisory principal

87
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.

88
Q

In a simplified industry arbitration, __________________ decides the case without a hearing.

A

In a simplified industry arbitration, one non-public arbitrator decides the case without a hearing.

89
Q

When are charges related to DUI or shoplifting required to be reported to FINRA?

A

If it results in a felony charge, reporting is required. If it results in a misdemeanor charge, it is not reported.

90
Q

A non-branch office must be reviewed on a ________ cycle.

A

A non-branch office must be reviewed on a periodic cycle.

91
Q

How often are summaries of written customer complaints filed with FINRA?

A

Quarterly

92
Q

What restrictions are placed on an RR who has been suspended by a regulator?

A

She may not receive commissions or other compensation, and may not perform clerical work

93
Q

True or False: A general securities principal is responsible for financial reporting.

A

False, a Financial and Operations Principal performs that function.

94
Q

The ______ is the office providing final approval of retail communication.

A

The OSJ (Office of Supervisory Jurisdiction) is the office providing final approval of retail communication.

95
Q

True or False: An indictment on a felony charge is reportable to FINRA.

A

True

96
Q

Who approves option retail communication?

A

A Registered Options Principal (ROP)

97
Q

While in the military, an RR has special inactive status. Must he return to the same BD to obtain registration benefits?

A

No, he may return to his previous BD or go to a new firm.

98
Q

True or False: At the time of registration termination, the employee must sign Form U5.

A

False. A copy of Form U5 is provided to the terminated employee, but his signature is not required.

99
Q

To not be a branch office, a location may not be used for securities business more than ____ business days per year.

A

To not be a branch office, a location may not be used for securities business more than 30 business days per year.

100
Q

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

A

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

101
Q

True or False: FINRA reporting is required if an RR associates with a person who would be subject to disqualification.

A

True

102
Q

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

A

False. Arbitration decisions are final and binding.

103
Q

May a Series 6 registered person engage in the sale of individual stocks or bonds?

A

No. Series 6 RRs may only sell packaged products, such as mutual funds and annuities.

104
Q

At what level does an internal fine become reportable to FINRA?

A

$2,500

105
Q

Form U4 contains details about settlements exceeding $______ related to complaints, arbitration, or civil litigation.

A

Form U4 contains details about settlements exceeding $15,000 related to complaints, arbitration, or civil litigation.

106
Q

True or False: The industry requirement for fingerprinting extends to back office personnel.

A

True

107
Q

When arbitration involves public customers, __________ of arbitrators must be from outside the securities industry.

A

When arbitration involves public customers, a majority of arbitrators must be from outside the securities industry.

108
Q

Gifts exceeding $_____ are considered excessive.

A

Gifts exceeding $100 are considered excessive.

109
Q

If a trainee fails his Series 6 examination on the third attempt, he must wait _____ months to re-test.

A

If a trainee fails his Series 6 examination on the third attempt, he must wait 6 months to re-test.

110
Q

How many people may work from a primary residence without it being considered a branch office?

A

One person or any immediate family members who also reside at the location

111
Q

What is required for an RR to share in a client’s profits or losses?

A

Approval from the client and firm is required and any sharing must be in proportion to the money invested

112
Q

A penalty imposed by a hearing panel is generally effective ____ days after assessment.

A

A penalty imposed by a hearing panel is generally effective 30 days after assessment.

113
Q

True or False: Only registered personnel are required to be fingerprinted.

A

False. Any individuals handling funds or securities are required to be fingerprinted.

114
Q

A mutual fund wholesaler may provide non-cash compensation up to $____ per person, per year.

A

A mutual fund wholesaler may provide non-cash compensation up to $100 per person, per year.

115
Q

Under FINRA rules, what office regulates other offices?

A

An Office of Supervisory Jurisdiction (OSJ)

116
Q

True or False: Mediation is often cheaper and quicker than an arbitration proceeding.

A

True

117
Q

4

The______________________ covers disciplinary actions by FINRA against member firms and their employees.

A

The Code of Procedure covers disciplinary actions by FINRA against member firms and their employees.

118
Q

True or False: A General Securities Principal may approve an option account.

A

False. The approval must be provided by an ROP.

119
Q

May a firm conduct its annual compliance meeting via webcast?

A

Yes, provided participants have the ability to have questions answered on a timely basis.

120
Q

True or False: All employee-to-employer disputes must be submitted to arbitration.

A

False. Sexual harassment and discrimination cases may be taken to court.

121
Q

When is a firm required to acknowledge a written client complaint?

A

Within 15 days of receipt

122
Q

What is the most severe non-monetary penalty that may be imposed by a FINRA Hearing Panel?

A

Expulsion from FINRA

123
Q

If a qualification exam has been failed for the third time, what waiting period applies?

A

After the third unsuccessful attempt, the waiting period is 180 days after each additional attempt.

124
Q

May an RR have an outside brokerage account?

A

Yes, but the carrying firm must notify the RR’s employer.

125
Q

44

True or False: A broker’s broker deals with other BDs, but does not deal with the public or underwrite new issues.

A

True

126
Q

If a person fails an exam three times, how long must he wait before retesting?

A

180 days

127
Q

Registration status becomes __________ if the Regulatory Element of CE is not completed within the prescribed period.

A

Registration status becomes inactive if the Regulatory Element of CE is not completed within the prescribed period.

128
Q

What type of registration designation is required to manage an OSJ?

A

A principal designation

129
Q

The statute of limitations for submitting an arbitration claim is ___ years from the occurrence of the event.

A

The statute of limitations for submitting an arbitration claim is 6 years from the occurrence of the event.

130
Q

True or False: A representative currently serving in the military may receive commissions during this period.

A

True

131
Q

An RR’s employer is referred to as a ________________.

A

An RR’s employer is referred to as a Broker-Dealer (BD).

132
Q

If a trainee fails his Series 6 examination on the first attempt, he must wait _____ days to re-test.

A

If a trainee fails his Series 6 examination on the first attempt, he must wait 30 days to re-test.

133
Q

After receiving notice from the Dept. of Enforcement regarding a complaint, the firm must respond within ____ days.

A

After receiving notice from the Dept. of Enforcement regarding a complaint, the firm must respond within 25 days.

134
Q

Identify the acronym: RR

A

Registered Representative

135
Q

U4 and U5 forms must be retained for ______ years after the associated person’s employment is terminated.

A

U4 and U5 forms must be retained for three years after the associated person’s employment is terminated.

136
Q

A branch that supervises one or more non-branch locations must be inspected ____________.

A

A branch that supervises one or more non-branch locations must be inspected annually.

137
Q

The person supervising a producing branch manager must be either _______ to, or ____________ of, the manager.

A

The person supervising a producing branch manager must be either senior to, or independent of, the manager.

138
Q

True or False: A difference between arbitration and mediation is that mediation is binding and arbitration is not.

A

False. Arbitration is binding on all parties, whereas mediation is not.

139
Q

True or False: An employee of a BD who wants to open an account with another BD must obtain her employer’s permission.

A

False. The employer must be provided with written notification.

140
Q

Industry disputes are handled through ______________.

A

Industry disputes are handled through Arbitration.

141
Q

Any awards granted by an arbitrator must be paid within how many days?

A

30

142
Q

True or False: All employees of a BD are required to be fingerprinted.

A

False. Clerical employees are not fingerprinted if they do not handle customer accounts, assets, or books and records.

143
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.

144
Q

If a firm receives a fine exceeding $______, FINRA reporting is required.

A

If a firm receives a fine exceeding $25,000, FINRA reporting is required.

Series 10 (7 decks)

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