Chapter 12: Regulations Flashcards
The ______ is responsible for supervision of the capital markets.
Securities and Exchange Commission (SEC)
The ______ actually writes the laws that govern the financial markets. It also has the ability to enforce those laws, even if the broker/dealer or associated person is registered with a(n) ______.
- Securities and Exchange Commission (SEC)
2. Self-Regulatory Organization (SRO)
The ______ governs publicly traded companies as well as industry professionals. The ______ can revoke the registration of a broker/dealer, but it has few punitive powers. However, it refers criminal cases to the judicial system.
Securities and Exchange Commission (SEC)
In both the OTC and exchange secondary markets, the ______ regulates the SROs and supervises their enforcement responsibilities.
Securities and Exchange Commission (SEC)
The ______ of the United States appoints SEC board members for terms of ______, with advice and consent of the ______.
- President
- 5 Years
- U.S. Senate
The ______ was established to regulate the trading of securities after they have been issued (secondary market) and to regulate exchanges and broker/dealers.
Securities Exchange Act of 1934
The rules and regulations of FINRA are referred to as ______. These fall into 4 main categories:
- The ______ relates to dealings between member firms, covering all transactions in nonexempt securities while providing orderly completion of dealer-to-dealer transactions.
- The ______ relate to a member firm’s dealings with the public.
- The ______ outlines the procedural process in the event of violations and complaints.
- The ______ is concerned with settling disputes between dealers or brokers and the public.
- Bylaws
- Uniform Practice Code (UPC)
- Conduct Rules
- Code of Procedure
- Code of Arbitration
FINRA Bylaw
The ______ relates to dealings between member firms, covering all transactions in nonexempt securities while providing orderly completion of dealer-to-dealer transactions.
Uniform Practice Code (UPC)
FINRA Bylaw
The ______ relate to a member firm’s dealings with the public.
Conduct Rules
FINRA Bylaw
The ______ outlines the procedural process in the event of violations and complaints.
Code of Procedure
FINRA Bylaw
The ______ is concerned with settling disputes between dealers or brokers and the public.
Code of Arbitration
FINRA’s ______addresses how broker/dealers interact with each other and with associated persons. These rules establish standard industry practice for procedures such as regular way settlement, confirmation delivery, filing of forms such as U4s, U5s, and Form BDs.
Uniform Practice Code (UPC)
Any broker/dealer who is authorized to transact securities business in the U.S. is eligible for ______ membership, except those who have been suspended or barred from membership due to securities violations.
FINRA
The By-Laws define a(n) ______ as a firm who is registered with the Commission under the Act of ‘34.
Registered Broker/Dealer
The By-Laws define a(n) ______ as:
- An individual registered under the rules of FINRA.
- An individual who is directly or indirectly controlled by a member firm, regardless if the person is registered.
Associated Person
Personnel of FINRA members are required to be qualified with respect to both ______ and ______ under the UPC.
- Training
2. Experience
The ______ by-law addresses broker/dealer interaction with one another as well as associated persons.
Uniform Practice Code (UPC)
The two registration categories of FINRA personnel are ______ and ______. Both categories require FINRA registration and the passing of a qualifying examination.
- Principals
2. Representatives
Any FINRA member who has passed a qualifying examination and later terminates registration is required to pass the examination again if the termination is for a period of ______ or longer.
2 Years
All registration applications require the applicant’s ______, and must contain an agreement by the applicant by FINRA ______ and ______.
- Signature
- Rules
- By-Laws
Persons associated with a member, who are actively engaged in the management of the member’s securities business, including supervision, solicitation, or the training of persons associated with a member, must be registered as ______.
Principals
The following persons are included in the definition of ______:
- Sole proprietors
- Officers
- Partner
- Managers of Offices of Supervisory Jurisdiction
- Directors of corporations
Principal
A principal may register as a(n) ______ if activities are limited to dealings of shares of open-end investment companies, closed-end investment companies during the IPO only, and variable contracts and insurance premium funding programs.
Limited Principal - Investment Company and Variable Contracts (Series 26)
Any person associated with a member firm that is engaged in the investment banking or securities business must be ______. The process is started through the filing of a(n) ______, which requires personal information, ______ of address information, and ______ of employment history.
- Registered
- Form U-4
- 5 Years
- 10 Years
Persons whose activities are limited solely to investment company shares and variable contracts may seek a limited registration by passing a(n) ______ examination (______) or the ______ examination (______).
- Investment Company Product / Variable Contract Limited Representative (Series 6)
- General Securities Representative (Series 7)
Registered representatives with ______ can only sell closed-end investment companies during the initial offering. A(n) ______ is required to sell closed-end companies shares in the secondary markets.
- Series 6 Limited Registrations
2. Series 7
Industry employees who do not require ______ are persons who are not engaged in the sale of securities, or do not regularly have access to the keeping, handling, or processing of securities, money, or original books and records relating to securities or money.
Fingerprinting
______ training must be completed by registered persons on the ______ anniversary date of their original registration and every ______ thereafter. They have ______ from registration date for completion.
- Regulatory Element
- Second
- 3 Years
- 120 Days
______ training applies to a continuing and current education program maintained by members for their covered persons to enhance their securities knowledge, skills, and professionalism.
Firm Element
At a minimum, each member must evaluate and prioritize its training needs and develop a(n) ______ at least ______.
- Written Training Plan
2. Annually
If a registered representative is called to active duty military, the representative’s registration is put on special ______. During this freeze, if the representative is in the ______ window to complete continuing education, the window is frozen. The representative may continue to receive ______ from existing clients.
- Inactive Status
- 120-Day
- Commissions
If the representative terminates registration while on military leave, the representative has ______ to re-associate with a new employer before the ______ time limit begins.
- 90 Days
2. 2-Year
FINRA requires continuing education for registered persons, which consists of the ______ and the ______.
- Regulatory Element
2. Firm Element
The ______ is a computer-based FINRA training program that focuses on compliance, ethics, and sales practices and regulatory issues.
Regulatory Element
The ______ requires broker/dealer firms to provide formal training and education to their registered persons, all of which is based on the education and training needs of the firm.
Firm Element
______ requires that all applications must be properly signed by the applicant, submitted to ______ electronically via the CRD, and contain an agreement to comply with all federal securities laws, to pay dues and assessments to ______, and to keep each member’s application current at all times.
FINRA
CRD = Central Registration Depository
Registered representatives may voluntarily terminate FINRA registration at any time by written notice (______), which must be filed by the member firm through the CRD within ______ of termination. The firm must forward a copy to the ______.
- Form U5
- 30 Days
- Terminated Representative
CRD = Central Registration Depository
The old broker/dealer has no responsibility to give a copy of the ______ to the new broker/dealer. The new broker/dealer can receive a copy through the ______ or ask the ______ for a copy.
- Form U5
- Central Registration Depository (CRD)
- Applicant
If the new broker/dealer requests a copy of the Form U5 from the applicant, the applicant must provide it within ______.
2 Business Days
Persons terminating registration are still under the jurisdiction of FINRA, and subject to any complaint filings for ______ following the termination.
2 Years
Persons not requiring ______ registration include:
- Those whose sole functions are limited to clerical or ministerial duties.
- Not actively engaged in the investment banking or securities business.
- Associated persons of member firms whose only participation within the firm is the need for a nominal corporate officer or for capital participation.
- Those who effect securities transactions only on the floor of an exchange, only transact exempt securities, or only transact commodity futures transactions.
FINRA
If an applicant has previously been registered, the member firm shall obtain a copy of the ______ filed with FINRA. The member firm shall obtain the ______ no later than ______ following the filing of the application for registration.
- Uniform Termination Notice of Securities Industry Regulation (Form U5)
- Form U5
- 60 Days
Firms may become ______ for membership with FINRA, or subject to ______, for the following reasons:
- Broker/dealers (B/Ds) who have been suspended or expelled from a registered national securities association or national securities exchange.
- B/Ds who have been barred or suspended for conduct inconsistent with just and equitable trade practices.
- B/Ds enjoined by a court from engaging as investment advisers, underwriters, brokers, dealers, or in any other capacity in connection with the securities business.
- Ineligible
2. Disqualification
FINRA may refuse or discontinue membership of any broker/dealer who makes a(n) ______ or ______ of a material fact on their membership application, or ______ to state any required material fact.
- False
- Misleading Statement
- Omits
Any individual membership may be refused or revoked if the applicant has been convicted of any misdemeanor involving a(n) ______ transaction, ______, ______ conversion, and/or ______ of funds.
- Securities
- Embezzlement
- Fraudulent
- Misappropration
Any person who has been convicted within the past ______ of application for registration of a felony or a securities related misdemeanor may be subject to ______.
- 10 Years
2. Disqualification
Persons may be barred from performing duties of a registered representative because of prohibited practices and other violations of ______.
Conduct Rules
Member firms cannot represent ______ in a way that would suggest that they are endorsed by the Authority.
FINRA Membership
If a broker/dealer conducts business in an office inside a(n) ______ , the broker/dealer must be clearly delineated with separate identification. Customers must be notified that the broker/dealer offers security products which are not ______ and are not ______.
- Bank
- FDIC-Insured
- Bank Obligations
The registration process for personnel requires that applicants complete a(n) ______ that is submitted to FINRA electronically and contains an agreement to comply with all federal securities laws, pay dues and assessments to FINRA, and keep information on the application current at all times.
Form U4
Information on a(n) ______ includes the following:
- Name
- Social Security number
- Physical characteristics
- Past residential addresses (for the previous ______)
- Employment history (for the previous ______)
- Financial history relative to bankruptcy (for the previous ______)
- Unsatisfied liens
- Any disciplinary history (if applicable), such as felony convictions, and misdemeanors that involve securities or theft, forgery, or embezzlement.
- Form U4
- 5 Years
- 10 Years
- 10 Years
Form U4 information is stored in FINRA’s ______ database. Any changes to Form U4 information must be updated in ______.
- Central Registration Depository (CRD)
2. 30 Days
All candidates for registration must submit ______ as part of the registration process. The ______ requirement is also extended to persons that have access to processing transactions and handling of securities, money, or firm financial records, whether or not they are registered.
- Fingerprints
2. Fingerprinting
According to FINRA Rule 1122, members or associated persons cannot file membership and registration that is ______, or fail to correct ______ once informed of it.
- Misleading
2. Misleading Information
According to FINRA, ______ is information that is incomplete or inaccurate to the point of being misleading or intending to mislead.
Misleading Information
Filing false, inaccurate, and/or misleading information may result in ______, which, in turn, may prevent a person from becoming registered, or can result in a revocation of registered status.
Statutory Disqualification
Final responsibility for proper supervision rests with the ______.
Member
A member’s supervisory system must provide, at a minimum, for the following:
- Establishing and maintaining ______.
- Designation of an appropriately ______ with the authority to carry out the supervisory responsibilities of the member.
- Designation as a(n) ______ of each location.
- Designation of one more appropriately ______ in each OSJ, including the main office, and one or more appropriately registered ______ or ______ in each non-OSJ branch office.
- ______ of each registered person to an appropriately registered representative and/or principal for his/her supervision.
- ______ to determine that all supervisory personnel are qualified by virtue of experience or training to carry out their assigned responsibilities.
- Participation of each registered representative, at least ______, in an interview or meeting conducted by persons designated by the member at which compliance relevant to the activities of the representative(s) are discussed.
- Each member must designate and specifically identify to FINRA one or more ______ who will review the supervisory system, procedures, and inspections implemented by the member.
- Written Procedures
- Registered Principal(s)
- Office of Supervisory Jurisdiction (OSJ)
4a. Registered Principals
4b. Representatives
4c. Principals - Assignment
- Reasonable Efforts
- Annually
- Principals
FINRA’s ______ addresses how member firms and associated persons interact with the public. The basic intent of ______ is to treat customers fairly and ethically.
Code of Conduct
______ is a free resource provided FINRAs Public Disclosure Program that allows public persons to research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers. Accessible by phone or online, it provides information that has been stored in the ______ as part of the registration process.
- BrokerCheck
2. Central Registration Depository (CRD)
Available information found on ______ includes the following:
- The person’s employment history and other business experience required to be reported on Form U4.
- Currently approved registrations for the member or associated person.
- The main office, legal status, and type of business engaged in by the member.
- Any event or proceeding required to be reported under the Rule.
BrokerCheck
It is each member’s responsibility to keep in each ______ one of the following:
- A separate file of all written complaints of customers with explanation of action taken by the member, if any.
- A separate file of all written complaints and a clear reference to the files containing the correspondence related to them (as maintained in the office).
Office of Supervisory Jurisdiction
Use of ______, ______, or other ______ devices when communicating with the public is strictly prohibited.
- Manipulative
- Deceptive
- Fraudulent
Distribution of advertisements, sales literature, or marketing materials that contain ______ information or are in any way ______ are specifically prohibited.
- False
2. Misleading
______ are defined as any material used in the media (newspapers, magazines, radio, television, telephone recordings, or other public media).
Retail Communications
Any promotional communications sent to more than ______ customers or prospects within a(n) ______ period are considered to be retail communications.
- 25
2. 30 Calendar-Day
______ are included in the definition of retail communications since they directed at or made available to the public. ______ refer to participation in seminars, radio or television interviews, or other public speaking activities.
Public Appearances
______ include any reprint of an article or its excerpt issued by a publisher not affiliated with the member using the reprint, or to any report concerning a registered investment company prepared by an independent entity.
Independently Prepared Reprints
Independently prepared reprints are considered ______, and must be approved by a(n) ______ before first use.
- Retail Communications
2. Principal
The term ______ refers to any written or e-mail messages distributed to either existing customers or to 25 or fewer customers within any 30 calendar-day period.
Correspondence
Any ______ or endorsement of a security by a third party which is misleading is unlawful.
Testimonial
Any presentation of such testimonial must state all of the following:
- If any ______ or other ______ was paid for the testimonial or endorsement.
- If the statement implies that the person is ______ by special experience or knowledge, such ______ must be listed.
- Include the statement “______”.
1a. Fee
1b. Compensation
2a. Qualified
2b. Qualifications
3. Past Performance Does Not Indicate Future Results
Any offer of ______ must indeed be furnished entirely free and without conditions or obligations on the part of the respondent. Such offers are prohibited if the respondent must assume any sort of obligations as a result.
Free Services
Prior to use, ______, including ______, must be approved by a registered principal of the member firm.
- Retail Communications
2. Advertisements
Member firms that have not previously filed a retail communication must file their initial retail communication with FINRA at least ______ prior to use, and must continue to file at least ______ prior to use for a period of ______.
- 10 Business Days
- 10 Business Days
- 1 Year
Retail communication materials must be kept on file for ______, along with the name of the preparing person and the name of the approving person. Required information also includes the ______ of any statistical tables, charts, graphs, or illustrations used in communications with the public.
- 3 Years
2. Sources
While ______ does not need to be approved by a registered principal prior to use, it is subject to supervision and review requirements; however, the review may be either pre or post.
Correspondence
Specific communications with ______, ______ memorandums, ______ announcements, routine announcements discussing member firm personnel changes, and ______ are excluded from the scope of FINRA approval rule.
- Individuals
- Internal
- Tombstone
- Prospectuses
______ is communication with institutional investors, defined as any:
- Banks.
- Savings and loans associations.
- Insurance companies.
- Registered investment companies.
- Registered investment advisers.
- Person or entity with assets of at least $50 million.
- Government entities or subdivisions.
- Employee benefit plans and qualified plans with at least 100 participants.
- FINRA member firms and registered associated persons.
- Persons acting solely on behalf of any institutional investor.
Institutional Sales Material
A firm’s ______ are excluded from the definition of institutional communication.
Internal Communications
______ is defined as any written or electronic communication that is directed only toward institutional investors, such as banks, thrifts, savings and loans, insurance companies, mutual funds, and other broker/dealers.
Institutional Sales Communications
Institutional communications must be reviewed or approved by a(n) ______. This review or approval may be executed after the first use of the material as long as the firm has training in place for their associated persons.
Registered Principal
All institutional communications, including the name of the person who prepared each item, must be maintained for a period of ______ from the date last issued. Included with this filing requirement is information about the ______ of any statistical tables, charts, graphs, or illustrations used in communication with the public.
- 3 Years
2. Sources
All institutional communications, as well as correspondence and retail communications, are subject to ______ by FINRA for at least ______ from last use.
- Spot-Check
2. 3 Years
Predicting future performance based on illustrations showing past performance is considered ______.
Misleading
______ are defined as transactions effected outside the normal business of an associated person’s employment with a member firm. These are transactions that are not recorded on the firm’s books and records.
Private Securities Transactions
Participating in private securities transactions is known as “______,” and is a violation of FINRA Conduct Rules.
Selling Away
______ may include (but are not limited to) new offerings of securities which are not registered with the ______.
- Private Securities Transactions
2. SEC
Transactions among immediate family members for which an associated person receives no compensation, or personal transactions in investment company and variable annuity securities, are not considered ______.
Private Securities Transactions
Associated persons of member firms are prohibited from entering into private transactions without prior ______ to the member firm.
Written Notice
The private transaction written notice must describe in detail the following:
- The proposed ______.
- The person’s proposed ______.
- ______ conditions.
- Transaction
- Role
- Compensation
In the case where a series of related private transactions without selling compensation are involved, an associated person needs to provide only a(n) ______.
Single Written Notice
______ refers to any compensation paid directly or indirectly as a result of the purchase or sale of a security, including commissions, finder’s fees, rights of participation in profits, tax benefits, expense reimbursement, etc.
Selling Compensation
If the associated person will be compensated for a private transaction, the member firm must ______ the transaction and ______ it on their books. Once the transaction is ______, it is the member’s responsibility to ______ the person’s participation in the transaction, as if it is executed on behalf of the member.
- Approve
- Record
- Recorded
- Supervisor
If the member disapproves a person’s participation in a private transaction, the person _____ participation in the transaction in any manner, directly or indirectly.
May Not
No member or associated person can accept any ______ in the form of cash, non-cash compensation, securities, payments, or gifts from anyone other than the ______ with which the person is associated unless special arrangements, permissions, and recordkeeping are in place.
- Compensation
2. Member
The following non-cash compensation arrangements are permitted:
- Gifts that do not exceed an annual amount of ______ per person and are not preconditioned on achievement of a sales target.
- An occasional ______, a(n) ______ to a sporting event or the theater, or comparable ______, which is not frequent or contingent upon a preconditioned sales target.
- ______ or ______ for the purpose of training or education of associated persons of a member.
- $100
2a. Meal
2b. Ticket
2c. Entertainment
3a. Payment
3b. Reimbursement
FINRA prohibits members from using ______ in retail communications unless the rankings are created by and published by a ranking entity, or based on performance ratings by a ranking entity.
Mutual Fund Rankings
FINRA defines a(n) ______ as an “entity that provides general information about investment companies to the public, that is independent from the investment company and its affiliates, and whose services are not procured by the investment company or any of its affiliates to assign the investment company a ranking.”
Ranking Entity
A(n) ______ is an investment information service that is completely independent from the investment company (mutual fund) or its affiliates, and is not being paid for a ranking by the investment company.
Ranking Entity
An example of a(n) ______ is Morningstar.
Ranking Entity
FINRA prohibits the display of a headline or prominent statement that says a fund is a(n) ______ in an investment category, unless the statement is true.
Top Performing Fund
Retail communications containing investment company rankings must prominently display the following disclosures:
- The fund’s investment ______ (income, growth, balanced).
- The ______ of investment companies, or, if applicable, investment company families in the category.
- If the investment company itself created the ______ or ______.
- The ______ of the ranking entity.
- The ______ of the period being ranked, including the first and last day of the period.
- ______ criteria (total return, yield, etc.).
- Category
- Number
3a. Category
3b. Subcategory - Name
- Length
- Ranking
Retail communications containing investment company rankings must also include these required disclosures:
- A statement that past performance is no guarantee of ______.
- Whether or not the ranking has taken ______ and ______ into account.
- The ______ of the ranking (such as a magazine).
- If the ranking is a(n) ______ system (like the star system) and the meaning of the ______.
- If the ranking is based on total returns or yields that do not include ______ and ______ which had a material effect on the return or yield during the ranking period, then there must be a statement to that effect.
- Future Results
2a. Loads
2b. Sales Fees - Publisher
- Symbol(s)
5a. Fees
5b. Expenses
Rankings must be current, or at least to the end of the most recent ______. If the ranking entity does not have a ranking of the most recent ______, the most current ranking may be used as long as it is not ______.
- Calendar Quarter
- Quarter
- Misleading
With the exception of ______, the following rules apply to time periods for investment company rankings in retail communications:
- Rankings cannot show a time period less than ______ (unless it based on yield).
- Investment that have been in existence for one year may show a total return ranking for a(n) ______ period.
- Companies in existence for 5 years that show ______ of total returns must also show ______ of total returns.
- Companies in existence for 10 years that show ______ of total returns must also show ______ and ______ returns.
- Money Market Funds
- One Year
- 1-Year
3a. One Year
3b. 5 Years
4a. One Year
4b. 5-Year
4c. 10-Year
FINRA defines a(n) ______ as a report issued by an independent third party that describes the way the price of a bond fund (net asset value) changes in reaction to market conditions and the economy.
Bond Mutual Fund Volatility Rating
FINRA further states that a(n) ______ contains an objective analysis of a bond fund’s performance and other considerations like the credit quality of individual bond holdings, interest rate risk, currency risk, prepayment risk, and currency risk, that can affect the value of the portfolio.
Bond Mutual Fund Volatility Rating
When used in ______, bond mutual fund volatility ratings must be accompanied or preceded by a(n) ______ (supplemental sales literature). There must be a(n) ______ that includes all of the recent bond mutual fund volatility ratings issued on the fund, the names of the ratings’ issuers, the most current rating, and the date of the rating.
- Retail Communications
- Prospectus
- Disclosure Statement
When used in retail communications, there must be a(n) ______ of the bond mutual fund volatility rating written in narrative form that includes the following disclosures:
- A statement that no ______ exists for assigning ratings.
- A description of the ______ and ______ used to ascertain the rating.
- The type of ______ that the rating measures (such as long-term volatility or short-term volatility).
- A statement that not all bond funds have ______, and that the portfolio may have changed since the rating was issued.
- A statement that there is no ______ that the fund will continue to have the same rating or to performance as it has in the past.
- Any ______ or ______ that was paid for the rating.
- Description
- Standard Method
2a. Criteria
2b. Methodologies - Risk
- Volatility Ratings
- Guarantee
6a. Fee
6b. Compensation
The bond volatility rating must meet the following criteria:
- The rating must not refer to volatility a “______”.
- The supplemental sales literature uses the most ______ ratings available, and the information is current to at least the end of most recent calendar ______.
- The rating and disclosure statement must be ______, ______ and ______, and based only on factors that are objective and quantifiable.
- The issuer of the rating must provide detailed disclosure of its ______ and make it available to investors through a website, a toll-free number, or both.
- Risk Rating
2a. Up to Date
2b. Calendar Quarter - Clear, Concise, and Understandable
- Methodology
Members must maintain ______ containing all purchases and sales of securities as well as company and customer ______. Members are also required to retain ______.
- Daily Blotters
- Ledgers
- Records
It is illegal to ______, ______, or ______ any account, book, or other documents that are required to be maintained by the firm.
Destroy, Mutilate, or Alter
Books and records must be “______” times. Information in this format cannot be modified once it is written.
Write-Once, Read Many (WORM)
Any person who has access to or handles books and records must be ______.
Fingerprinted
Firms can submit fingerprints without registering an individual by completing ______.
Form NRF (Non-Registered Fingerprint).
Type of Record: Account Records
Retention Requirement: ______
6 Years
Type of Record: Customer Complaints
Retention Requirement: ______
4 Years
Type of Record: Confirmations
Retention Requirement: ______
3 Years
Type of Record: Retail Communications
Retention Requirement: ______
3 Years
Type of Record: Institutional Communications
Retention Requirement: ______
3 Years
Type of Record: Correspondence
Retention Requirement: ______
3 Years
- Retail communications: ______ retention requirement
- Correspondence: ______
- Account records: ______
- Confirmations: ______
- Customer complaints: ______
- Institutional communications: ______
- Retail communications: 3 years
- Correspondence: 3 years
- Account records: 6 years
- Confirmations: 3 years
- Customer complaints: 4 years
- Institutional communications: 3 years
What type of record has a retention requirement of 6 years?
Account Records
What type of record has a retention requirement of 4 years?
Customer Complaints
For the first ______, records must be kept in an easily accessible place and readily available to regulators upon request.
2 Years
Elder abuse with regard to financial exploitation warning signs may include:
- ______ financial products and services.
- Unusual or erratic ______.
- Frequent, large ______.
- Selling investments or closing accounts without regard to the ______.
- Large ______ out of the account that are not characteristic of past activity.
- Sudden change in ______ or appointment of a(n) ______.
- Inappropriate
- Transactions
- Withdrawals
- Penalties
- Wire Transactions
6a. Beneficiaries
6b. Power of Attorney
FINRA permits member firms that suspect financial exploitation of seniors and other adults who have mental or physical disabilities to place a(n) ______ on the disbursement of funds or securities from the customer’s account.
Temporary Hold
The temporary hold is authorized for ______, but could be extended for another ______ if warranted.
- 15 Business Days
2. 10 Days
Members are required to make reasonable efforts to obtain the name and contact information of a(n) ______ for a customer’s account.
Trusted Contact Person
At the time of ______ and when ______, the member firm must provide written disclosure to the customer that is authorized to contact the trusted contact person and disclose information about the customer’s account.
- Account Opening
2. Updating Account Information
If a hold is placed on the account, the member firm is required to provide ______, and the ______, the hold to the trusted contact person and the customer within ______ of the hold.
- Notification Of
- Reason For
- 2 Business Days
The ______ is the section of FINRA By-Laws that concerns the handling of securities violations and complaints.
Code of Procedure
A customer (or the ______) with a complaint against a member firm or its personnel may submit a written complaint to any ______.
- Board of Governors
2. Department of Enforcement (DOE)
The ______ has the initial jurisdiction for the handling of complaints. The ______ has appellate and review jurisdiction.
- Department of Enforcement (DOE)
2. National Adjudicatory Council (NAC)
A report of customer complaints must be submitted to FINRA each ______, no later than the last day of the month following the ______’s end.
- Calendar Quarter
2. Quarter
If a customer complaint results in a statutory disqualification, a report must be sent to FINRA within ______.
10 Business Days
If the firm has assessed internal disciplinary measures in the amount of ______ or more, this information must be filed with FINRA.
$2,500
The ______ deals with discipline of a representative, principal, or firm. The civil (money) part of disputes is a separate process called ______.
- Code of Procedure
2. Code of Arbitration
______, the ______, or a(n) ______ can initiate a complaint.
- FINRA
- SEC
- Customer
When a written customer complaint has been received, the ______ starts the process by advising representatives and broker/dealers in writing, and conducts hearings to gather enough facts to make a fair decision. After the hearing, the ______ will make a written decision.
Department of Enforcement
If the Department of Enforcement determines that a violation has occurred, a(n) ______ or ______ may result. For more serious violations, a(n) ______, ______, or ______ from association with a member firm may be imposed. ______ may also be revoked.
- Censure or Fine
- Suspension, Expulsion, or Bar
- FINRA Registration
A person that has been ______ may not be associated with a member firm in any capacity, including clerical. ______ persons cannot be compensated in any manner, including remuneration from securities transactions, during the period of ______.
- Suspended
- Suspended
- Suspension
Appeals of Department of Enforcement decisions go to the ______, then to the ______, then to the ______.
- National Adjudicatory Council
- SEC
- Courts
If FINRA and the respondent agree, a penalty may be imposed through ______, ______, and ______ (similar to plea bargaining). This ______ process is only available if the respondent does not dispute the allegations in the complaint, and waives the right to a hearing and the right to an appeal.
- Acceptance, Waiver, and Consent
2. AWC