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SIE > Customer Accounts And Compliance Consideration Quiz > Flashcards

Customer Accounts And Compliance Consideration Quiz Flashcards

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SIE Exam flashcards
1
Q

An investment adviser representative (IAR) has a friend who is affiliated with a broker / dealer and who makes commissions based on each transaction made. The friend told the IAR that she would split any commissions that result from the IAR clients transactions. What is the IARs duty regarding disclosures to her client?

A

She must disclose the affiliation and the commissions being paid

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2
Q

What is the annual exclusion amount for money given as a gift?

A

$15,000

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3
Q

Which of the following is true regarding an individual account?

A

No one but the owner may give trade instructions unless the customer has provided advance written permission

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4
Q

The organization that provides custody services for securities certificates safekeeping is known as the

A

Depository trust and clearing Corporation

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5
Q

Under the Uniform Gifts to minors act which of the following statements is correct concerning a custodian account between a parent and minor child?

A

Taxes on earned income from the account are the responsibility of the minor

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6
Q

All of the following are necessary requirements for a broker/dealer to hold a customers mail

A

A written request from the customer
A way to communicate with the customer in a timely manner to provide important notifications
Written disclosure to the customer of alternative ways to access account information

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7
Q

What information is necessary to determine a customers financial status?

A

Current insurance
Participation in retirement programs
Income

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8
Q

Standards for the customer identification program (CIP) require all of the following?

A

Keep records of how identity was verified
Verifying the financial status and credit history of the customer
Comparing the identity to the government lists of known terrorists

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9
Q

Which of the following would likely increase a clients risk tolerance?

A

An inheritance

A promotion at work

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10
Q

Retail communications must be approved prior to use with the general public and must be kept on file for a period of

A

3 years

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11
Q

A registered representative must determine an investors investment objective to

A

Give the registered representative a frame of reference for making investment recommendations

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12
Q

Which of the following practices is permissible in accordance with FINRA conduct rules?

A

An account executive sharing in the profits in a discretionary account

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13
Q

A broker dealer would need to file a currency transaction report for which of the following transactions?

A

Single transaction involving $11,000 of currency

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14
Q

Mr. & Mrs Hardy want to contribute into their IRAs. Mr. Hardy earns $35,000 a year. Mrs. Hardy is currently not working. What is the maximum they can currently contribute into their IRAs?

A

Up to $6,000 for Mr. Hardy and $6,000 for Mrs Hardy

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15
Q

All of the following are differences between qualified and nonqualified retirement plans

A

Taxation’s of withdrawals
Taxation of contributions
IRS approval requirements

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16
Q

Participation in seminars radio or television interviews would be best described as

A

Retail communication

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17
Q

A security that may be purchased on a margin is known as a marginable security. Which of the following may be purchased on a margin?

A

Over the counter stocks approved for margin
Any listed NYSE stock
Any stock listed on the NASDAQ National market system

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18
Q

A client requested that his registers representative call his brother who is interested in investing. The clients brother is on the National Do not Call registry. The registered representative should

A

Tell the client he cannot call his brother without the brothers written permission

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19
Q

A premature distribution from a Roth IRA made before the individual reaches age 591/2 is subject to a 10% penalty tax unless the distribution was for

A

A first time home purchase

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20
Q

Which of the following is true regarding a cash account?

A

The customer must pay for the purchase in accordance with Reg T within 4 business days
The investor must pay in full for all purchases by settlement date
Brokers may require a large deposit before opening an account

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21
Q

All of the following are appropriate methods a customer can use to opt out of Reg S-P privacy rules

A

A toll free phone number
A prepaid postcard addressed to the broker dealer
A link in email

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22
Q

All of the following are essential facts about a customer that should be obtained when opening an account?

A

Address
Name
Age

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23
Q

The following statements are true of anti money laundering compliance programs?

A

Broker dealers are required to file suspicious activity reports that identify and describe suspicious transactions
Member organizations anti money laundering programs must be approved in writing by a member of senior management
Financial entities are required to consult government provided lists of known suspected terrorists as part of account opening process

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24
Q

Which of the following is true concerning a nonqualified deferred compensation plan?

A

It can be discretionary
It is a contractual agreement in which an employee agrees to defer receipt of a portion of compensation until retirement
It does not require IRS approval

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25
Q

Member must keep copies of confirmation of trades sent to the customer for a minimum of how many years?

A

3 years

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26
Q

Which of the following facts concerning UGMA accounts is correct?

A

Gifts made to the minor are irrevocable
Only one custodian per minor is permitted
Margin transactions are not allowed

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27
Q

When opening a new account a registered representative should acquire

A

Personal identification data
investment experience
Objectives and time horizons
Risk tolerance

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28
Q

Which of the following is true regarding a clients risk tolerance?

A

It determines the investors degree of tolerance of negative changes in the portfolio
The risk tolerance factor is more important when an investor has control over the purchase and sale of the investment
The risk tolerance associated with the investment is a non financial consideration of an investment risk.

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29
Q

Who must review institutional communication?

A

A registered principal

30
Q

In a custodian account the responsibility for tax liabilities from dividends interest income and capital gains belongs to the

A

Minor

31
Q

Active trading accounts must receive an account statement

A

Monthly

32
Q

Failing to respond to a regulatory request in a reasonable amount of time

A

Will be considered an additional violation

33
Q

For how long are member firms required to keep a customers written authorization to withdraw money from their account after the expiration date?

A

3 years

34
Q

Which type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distribution ms to start at age 70 1/2?

A

Roth IRA

35
Q

Which of the following signatures does FINRA require on a new account form?

A

A principal of the broker dealer

36
Q

Which of the following is true concerning fees charge by investment advisors?

A

The advisory fees must be disclosed prior to advice being given

37
Q

Suitability judgements should be made based on

A

Information obtained from the client

38
Q

An individual has been contributing to a retirement account after in an after tax basis. His registered representative told him that he will be allowed to make contributions after age 70 1/2. Account growth is tax deferred. What type of retirement account does this individual have?

A

Roth IRA

39
Q

Which is true regarding UGMA/UTMA accounts?

A

The donor can be the custodian

40
Q

All of the following statements are correct with regard to a uniform gifts to minors act account

A

There can be only one custodian and one minor per account
The custodian is not required to be a guardian or relative of the minor
Purchases in the UGMA account are eligible for reduced sales charges from rights of accumulation

41
Q

An associated person may borrow money from a customer if?

A

The customer is the associated persons sister

42
Q

As identified by the Office of foreign assets control OFAC who is a specially designated national SDN?

A

A person who has been identified as a terrorist or narcotics trafficker

43
Q

Which of the following is true regarding the review and approval of correspondence?

A

Correspondence must be approved by a registered principal before or after use

44
Q

Which of the following joint account is designed specifically for married couples?

A

Tenancy by the entirety

45
Q

If a member firm suspects that a senior customer (age 65 or older) is being financially exploited it may

A

Place a temporary hold on disbursements from the customers account

46
Q

Which of the following is a feature of a Roth IRA?

A

Distributions may be deferred beyond the attainment of age 70 1/2
Qualified distributions at the time of retirement are not taxed as income
Contributions may continue beyond attainment of age 70 1/2

47
Q

In accordance with the uniform gifts to minors Act a donor may

A

Give an unlimited amount of cash

48
Q

What is the timeframe for filing relevant suspicious activity reports?

A

Within 30 days of initial discovery

49
Q

You buy 100 shares of XYZ at $30 a share for a new account. What are the industry’s minimum requirements?

A

$2000

50
Q

The purpose of the bank Secrecy act is all of the following?

A

To authorize the maintenance of records of financial transactions
To identify the source of currency transported into or out of the US
To identify the source and volume of currency deposited in financial institutions

51
Q

Business continuity plans are required to address all of the following?

A

Customer communications
Data backup and recovery
Regulatory reporting

52
Q

John age 45 earns $35,000 per year and wants to start an IRA for himself and his wife age 43 who does not work. Which option legally gives them the largest deduction?

A

$6,000 each in two single accounts

53
Q

A customer wishes to pay per her sons college tuition using funds from her brokerage account. Her account has a checking account feature. The member firm may withdraw the funds if the customer does which of the following?

A

Requests in writing a wire transfer of the funds to the college.

54
Q

A 35 year old employee and first time home buyer wishes to withdraw $10,000 from her IRA account for the purchase. This provision is available from

A

Traditional and Roth IRAs

55
Q

Which of the following is a qualified exemption to the IRA early distribution rule and will incur a penalty?

A

To purchase an investment property

56
Q

An investor has a margin account that contains $100,000 in 5% tax free municipal bonds and debit balance of $70,000 on which the investor is charged 8% interest. What are the tax consequences of this account?

A

No interest is taxable and non interest is deductible

57
Q

All of the following are required on a new account form?

A

The customers investment time horizon
The customers social security number
A principal signature

58
Q

Which of the following statements regarding coverdell education savings accounts are correct ?

A

Contributions are made with after tax dollars and grow tax deferred
Contributions must cease when the beneficiary turns 18

59
Q

An account under the uniform gifts to minors act earned $8,500 in interest income from bonds. The minor is 13 years old. How is this interest income taxes?

A

A portions is taxed at the minors rate and a portion is taxed at the parents rate

60
Q

All of the following are considered essential facts members must obtain when opening a new account?

A

Address
Whether customers or their spouses are employees of FINRA member
investment objective

61
Q

Which of the following statements is true about tax qualified annuities?

A

They must meet IRS requirements

62
Q

With respect to the securities exchange act of 1934 which of the following is true?

A

The act gave the security exchange commission SEC the right to enforce security laws
All publicly held companies are required to file an annual report and distribute the report to shareholders
Stock exchanges are required to register with the SEC

63
Q

A grandfather gifts $1,000,000 to his grandsons uniform gifts to minors act (UGMA) account. The grandfather is in the 33% tax bracket the widowed mother is in the 28% tax bracket and the son is less than 19 years old. Any unearned income is taxed to

A

The mother at 28%

64
Q

Which of the following is true regarding a nonqualified retirement plan?

A

Excess over cost base is taxed
It can discriminate in offering its benefits and selecting participants
Tax on accumulation is deferred

65
Q

According to FINRA rules which of the following falls under the definition of an independently prepared reprint?

A

A copy of magazine article on retirement planning issued by a publisher that is not affiliated with the member

66
Q

Which of the following is used to ascertain a customers financial status?

A

Participation in retirement programs
Liquidity needs
Discretionary income

67
Q

A firm has a joint account for a married couple. Any request for a disbursement from the account made by either spouse would require that

A

The check must be made joint to both owners

68
Q

Which of the following may be purchased on margin?

A

Mutual funds

69
Q

Benjamin is an advisor who uses a compensation plan that incorporates both advisory fees and commissions on the securities that he markets. Which of the following is true concerning this arrangement?

A

He must disclose how the fees and commissions are charged and calculated prior to giving any investment advice

70
Q

An investment advisor that maintains physical custody of a clients securities must do which of the following?

A

Maintain the securities in a separate account under the clients or advisors name

71
Q

The statute of limitations for using misleading or fraudulent tactics to induce the purchase or sale of securities is

A

5 years from the violation or within 2 years of discovery

72
Q

If a customers risk tolerance is not properly considered there is an increased danger of which of following?

A

I’ll timed buy sell decisions based on emotion

SIE (23 decks)

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