Chapter 3 Test questions Flashcards
During an examination of BDA, FINRA noted that the firm failed to address comms and correspondence in the firms WSP. Which of the following would LEAST likely be mentioned by FINRA
- Comms and Correspondence may include a fictional name by which the meber is commonly named.
- A BD must disclose any relationship between the member and any person named in Comm
- BD must disclose the specific products or services being offered if it includes other company names in the communication
- A BD may not publish Blind recruitment advertisements
A bd may offer blind recruitment adds. All others are true
Retail Comm relating to which of the following must be filed with FINRA by an established member firm
I- Investment Companies
II-DPP
III- Govt securities
Investment Companies and DPP’s with in 10days of first use ( post filing)
A testimonial used by a member firm in connection with retail communication must state..
A- The qulifications of the person giving the testimonial if a specialized opinion is given
B-past performance is not indicative of future…
C- Compensation of more thn $100 was paid
D-all of these
D- all of the above are correct
Under Finra rules a member may pay continuing commisions to a retired rep
I-Only if a written agreement is in effect
II-based on any new business generated
III-Based on business of continuing customers after retirement
B- can only pay comp if there is a written agreement in place and payout is based on business generated while employed and from accounts from continuing customers.
A member must prefile retail Comms if I The member has not celebrated its 1st anniversisary of its effected membership IIComms related to options III-Relates to CMOS IV order to prefile from FINRA
C- I II and IV
Which regarding AML detection within a registered BD is true?
A -BD with institional customers are exempt from developing and implementing AML policies
B-If Senionr manager leaves, AML polices should be reviewed by new manager
C-Placement, Layering and Structering are stages of moving currency form the FED
D- The bank Secrecy act requires that simple “red Flags” with no proof or evidence of a crime must be kept cofidential
B
Under FINRA rules, a member may charge aa customer for all the following services except: A- safe keeping of securities B- collection of interest and Dividends C-Fowarding Proxy materials D- appraisal of securities
C-Members may not charge clients for fowarding proxy materials
Once a charge is made for research, the exlusion from the definition of an IA no longer exists
A menber may pay commision to a nonmember for executing
I- a non exempt security in the OTC market
II-an exempt security in the OTC
III- A nonexempt securities transaction on an exchange floor.
Finra regulates OTC transactions in Non exempt securities. therefore all transactions in these securities must be between members.
The only time a member can pay a nonmember is for executing a trade outside FINRAS jursidication. ( exempt securities and listed securities on an exchange floor)
Members that promote day trading strategies must implement procedures to approve DT accounts. Day trading risk disclosure statements must be provided to
Each seperate Customer
SEC
The Fed
BOD f buy side firms
Each Seperate customer as well as posting it in the members website.
Correspondence distributed to institutional investors may be sent to each of the following except:
A- An employee benfit plan with 100 or more participants
B- A person acting soley on behalf is an institional investor
C- any entity with $50mm or more
D-A bank that has a history of distributing passages of its institutional correspondence to retail customers
No member may treat a communication as having been distributed to an institutional investor if the meber firm has reason to believe that the communication or any part of it will be made available to retail investors.
Which of the following are sunj to FINRA filing?
A- Retail Comm describing performance ranking of a open ended fund
B-Prospectus for a face amount certificate
C- Prospectus for a closed end fund
D-Internal memo
A- Prospectuses and internal memos need not be filed with FINRA
All research reports must disclose
Control relationship
Price at the time the original recommendation was made
The fact that the member firm has a 1% or position in the company
The name of the member firm providing the recommendation
Written recommendations prepared by a RR need prior approval of : I-SRO II- Principle of Firm III- SEC IV- The FCC
Written recommendations are subject to principle review and approval
A Finra member firm has a ID-ed a walking customer looking to open a cash account appears on the Office of Foreign Asset Control( OFAC) list. Who must oversee your firms dealings with this indivudal? A- firms AML officer B- The RR and the immediate supervisor C- the OSJ principal D- the firms financial and ops principal
Financial institutions including BD’s, must designate an officer of the firm as having responsibility for monitoring OFAC regs, reporting and overseeing the blocking of transactions or declining business with certain customers.
A New customer has given her lawyer limited power of attorney over a new margin account to persue a trading strategy suitable foe senior investors while she takes a trip. Which of the folowwing is true?
A- the firm may hold her mail while she is traveling for specific periods
B-Monthly statements must be sent to those people with Pof A over the account
C-The firm must send confirmations to those persons who have been granted PoA
D-The firm must hold mail without restriction for as long as he requires
A-Customer is ultimately responsible for her own account. Confirms will be sent to a third party only on written request.. A member can hold mail as long a written request is recvd. if request is longer than 3 consecutive months, it must include an acceptable reason ( safety or security concerns), convenience is not an acceptable reason for holding customer mail for longer than 3 months.
