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Series 24 Group Share > FC Chapter 5 > Flashcards

FC Chapter 5 Flashcards

1
Q

What must be addressed in a BD’s business continuity plan?

A

The process for communicating with regulators and mission-critical systems (computers) required to continue business

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2
Q

True or False: An office of convenience, used to occasionally meet with clients, may use signage if not too prominent.

A

False. Signage is not permitted for an office of convenience.

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3
Q

True or False: An employee of a BD who deals exclusively with the sale of REITs is NOT required to be fingerprinted.

A

True

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4
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.

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5
Q

Define wrap account.

A

A managed account that charges clients an annual fee to cover trading, research, and advisory services

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6
Q

A BD’s new applicant admits to a prior drug conviction (a misdemeanor). Is he subject to statutory disqualification?

A

No. However, the conviction must be disclosed on his Form U4.

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7
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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8
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.

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9
Q

Logan, an RR, has just obtained a Certified Financial Planner (CFP) designation. Must this be reported to FINRA?

A

No. SRO notification is not required due to obtaining a CFP or other designation.

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10
Q

What form must be filed with FINRA at the time an associated person’s registration is terminated?

A

Form U5

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11
Q

If a BD that operates on a bank’s premises fires one of its BD employees for cause, is the bank required to be notified?

A

No. The bank is only required to be notified if the terminated individual is also a bank employee.

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12
Q

Beyond details on regulator communication and mission-critical systems, what is included in a business continuity plan?

A

The impact of a disruption of the firm’s counterparties, alternative locations for employees, and regulatory reporting

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13
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.

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14
Q

True or False: CRD provides a process for filing registration and withdrawal applications for individuals and BDs.

A

True

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15
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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16
Q

When is a firm’s business continuity plan made available to FINRA?

A

Promptly upon request

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17
Q

How often are firms required to evaluate their training needs?

A

Annually

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18
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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19
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.

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20
Q

True or False: The CRD system may be used to process state registration applications.

A

True

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21
Q

Who usually manages a wrap account?

A

An investment adviser

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22
Q

What information does the CRD system provide about a registered person?

A

His employment and disciplinary history

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23
Q

List some examples of appropriate training for a BD’s Firm Element program.

A

Investment features/risks of products or services, suitability and sales practice considerations, and regulatory issues

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24
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.

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25
Q

True or False: A back office (operations office) is considered a branch office.

A

False. Back offices (operations offices) are non-branch locations.

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26
Q

Mary has been an RR for nine years. When is she next subject to the Regulatory Element of Continuing Education?

A

In two years, on the 11-year anniversary of her initial registration

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27
Q

Form U4 requires an applicant to disclose her employment history and convictions covering the last ____ years.

A

Form U4 requires an applicant to disclose her employment history and convictions covering the last 10 years.

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28
Q

Emma intends to advise on or facilitate mergers and acquisitions. What registration is required?

A

Series 79 - Investment Banking Representative

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29
Q

List some examples of items that would be unacceptable under an investment adviser’s soft-dollar arrangement with a BD.

A

Office space, accounting fees, travel reimbursement, licensing fees, advertising/marketing expenses

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30
Q

If an RR works from home, his stationery, business cards, and other communications must show what address?

A

The address of his branch office

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31
Q

True or False: A member firm may compensate a non-member for a trade in an exempt security.

A

True

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32
Q

True or False: Geographic distance from another OSJ is considered when determining whether a branch is an OSJ.

A

True

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33
Q

An office whose sole function is to ________ investment banking services is NOT considered a branch office.

A

An office whose sole function is to solicit investment banking services is NOT considered a branch office.

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34
Q

A branch office that is NOT responsible for supervising another office is inspected every ______ years.

A

A branch office that is NOT responsible for supervising another office is inspected every three years.

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35
Q

With what orders may an Assistant Representative for Order Processing assist?

A

Only unsolicited orders (with approval of a registered person)

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36
Q

If a firm reduces its staff to avoid the Taping Rule, the individuals may not be rehired for ____ days.

A

If a firm reduces its staff to avoid the Taping Rule, the individuals may not be rehired for 180 days.

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37
Q

Define producing branch manager.

A

An individual who handles accounts as an RR, but also performs various supervisory functions

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38
Q

When is a non-branch office inspected?

A

Periodically

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39
Q

To determine whether a branch is an OSJ, the __________ and ___________ of the branch’s activities are considered.

A

To determine whether a branch is an OSJ, the diversity and complexity of the branch’s activities are considered.

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40
Q

How often must senior management be apprised of the status of the firm’s supervisory control system?

A

Annually

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41
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.

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42
Q

True or False: An OSJ is only required to maintain a file of written complaints received from its own clients.

A

False. An OSJ must maintain written complaints received from its own clients and those of other supervised branches.

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43
Q

What are some of the functions performed through an OSJ?

A

Order execution, market making, structuring investment banking deals, and maintaining custody of client assets

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44
Q

True or False: All branch offices are inspected annually.

A

False. Branch offices that supervise one or more other offices are inspected annually.

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45
Q

If an associated person of a foreign BD visits a U.S. Institutional client, by whom must she be accompanied?

A

A registered person of a U.S. BD

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46
Q

What are the different methods a firm may use to provide disclosure regarding its business continuity plan?

A

A disclosure statement is provided at account opening, posted on its Website, or mailed to clients upon request.

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47
Q

True or False: When a BD operates on a bank’s premises, SIPC must approve the arrangement.

A

False. There is no requirement for the SIPC to approve the agreement.

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48
Q

Along with written complaints, what must be maintained in every OSJ?

A

A copy of the firm’s written supervisory procedures

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49
Q

True or False: Nonregistered foreign BDs who provide research to U.S. institutions may be exempt from registration.

A

True. An exemption is available provided certain guidelines are followed.

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50
Q

When is an RR working from home permitted to use e-mail for client communication?

A

If employer preapproval is obtained and the communication is routed through the firm’s servers.

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51
Q

If a BD operates on a bank’s premises, how does it generally obtain a client’s acknowledgment of the potential risks?

A

The BD generally makes a reasonable effort to obtain written acknowledgment from clients.

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52
Q

Who is the executive representative of a BD.

A

The individual authorized to transact business with FINRA

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53
Q

True or False: An office of supervisory jurisdiction (OSJ) is inspected monthly.

A

False. An OSJ is inspected annually.

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54
Q

Invest Brokerage, a FINRA and MSRB member, has had its membership suspended by the MSRB. What action may FINRA take?

A

FINRA considers expulsion or suspension from membership with another SRO as grounds for statutory disqualification.

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55
Q

How must disclosures be made to clients when an account is opened on the premises of a financial institution?

A

They must be made both orally and in writing.

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56
Q

A brokerage office conducts market-making activities and maintains custody of clients’ assets. What is this office?

A

An office of supervisory jurisdiction (OSJ)

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57
Q

True or False: An RR’s primary residence may NOT be used to meet with clients.

A

True

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58
Q

If an individual has regular access to the firm’s original books and records, is she required to be fingerprinted?

A

Yes, employees with regular access to books and records need to be fingerprinted.

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59
Q

Who supervises a producing branch manager?

A

The regional manager (i.e., someone who is senior to the producing branch manager)

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60
Q

True or False: A temporary location used less than 30 business days per year is a branch office.

A

False. If used less than 30 business days per year, a temporary location is a non-branch office (e.g., a vacation home).

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61
Q

How often must clients be notified of the availability of the BrokerCheck system?

A

Annually

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62
Q

True or False: The 3 parts of the A-B-C test for IAs are Advice about securities, being in the Business, and Commission.

A

False, the “C” of the investment adviser test is Compensation, not Commission.

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63
Q

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

A

True

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64
Q

Related to an individual’s registration, if an amendment is required, when must it be filed with the CRD?

A

Promptly

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65
Q

Holden has a Series 24 registration. Would he be permitted to accept a secondary market order for a closed-end fund?

A

Yes. A prerequisite for the Series 24 is holding a Series 7 registration.

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66
Q

List some examples of items that would be acceptable under an investment adviser’s soft-dollar arrangement with a BD.

A

Research reports, access to analysts, portfolio analysis software, attendance fee for a securities conference/seminar

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67
Q

Is denial or revocation of registration by another securities regulator considered grounds for denial by FINRA?

A

Yes

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68
Q

What type of compensation may a Series 11 representative receive?

A

Wage, salary, bonus, but not commissions

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69
Q

What is the typical fee range assessed by BDs in a wrap account?

A

From 1% to 3% of assets under management

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70
Q

Who must be covered under a BD’s Firm Element Continuing Education program?

A

Any registered person who has direct contact with clients and any person required to register as a research analyst

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71
Q

True or False: Preparation of retail communication is the responsibility of an OSJ.

A

False. Preparation may be done by a branch; however, approval must be provided by the OSJ.

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72
Q

Certification of the FINRA compliance process is attested to by the _____ of the BD.

A

Certification of the compliance process is attested to by the CEO of the BD.

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73
Q

Wrap accounts benefit clients who trade ___________.

A

Wrap accounts benefit clients who trade frequently.

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74
Q

What is an SRO?

A

Self Regulatory Organization, for example, FINRA or the MSRB.

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75
Q

If nonregistered, foreign BDs provide research to U.S. institutional clients, when may firms execute client trades?

A

When the trades involve securities covered by the report and the firms do not recommend executing through the foreign BD

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76
Q

When is a non-securities business office (i.e., an insurance office) not considered a branch office?

A

When it effects fewer than 25 securities transactions annually

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77
Q

True or False: An office where the firm’s operations department processes securities trades is a branch office.

A

False. A back office/operations office (non-sales office) is NOT a branch office.

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78
Q

When is a BD employee NOT required to be fingerprinted?

A

When not engaged in selling securities, has no access to funds/securities, does not handle or process funds/securities

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79
Q

For what items may soft dollars be used?

A

Research reports and educational seminars, but not for items that does not benefit the client

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80
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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81
Q

If the CEO of a BD participates in sales activities, give an example of who may supervise the CEO’s activities.

A

The compliance director of the BD, since this is someone who does not report directly to the CEO

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82
Q

True or False: If producing branch managers service accounts of family/friends, independent supervision is not required.

A

False. The independent supervision ensures protection of accounts from inappropriate actions by managers.

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83
Q

What is required of communication that is sent to more than 25 retail investors within any 30-calendar-day period?

A

Pre-use approval by a principal

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84
Q

What must be kept by a firm that has some of its RRs working from their primary residence?

A

A list of all primary residence locations and written procedures for supervising the sales activities of these locations

85
Q

What securities may an Equity Trader (Series 57) sell?

A

Both equity and convertible debt securities on an agency or principal basis

86
Q

For accounts opened on the premises of a financial institution, what must BDs disclose regarding the products offered?

A

That the products are not insured by the FDIC and are subject to investment risk (potential loss)

87
Q

What types of OSJ-performed responsibilities create the requirement that an office be supervised by a principal?

A

Final approval of account opening, review and approval of orders, and final approval of retail communication

88
Q

If a BD, who operates on a bank’s premises, terminates an RR who is also a bank employee, the _____ must be notified.

A

If a BD, who operates on a bank’s premises, terminates an RR who is also a bank employee, the bank must be notified.

89
Q

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

A

An office of convenience

90
Q

True or False: A registered person with no disciplinary actions for 15 years is excused from the Regulatory Element.

A

False. The Regulatory Element of Continuing Education is an ongoing process with no graduation from the plan.

91
Q

True or False: An RR serving in the military may continue to function as a registered person.

A

False

92
Q

On termination of an RR’s employment, when must Form U5 be filed with FINRA and a copy provided to the RR?

A

Within 30 days

93
Q

True or False: A registered person’s Continuing Education requirement is deferred while serving in the military.

A

True

94
Q

What are the specific limitations to ensuring an office of convenience does not become a branch office?

A

It may only be used occasionally (always by appointment), and no signage may be used to suggest it is a branch office.

95
Q

Once notified that taping is required, firms have ____ days to start taping and tapes are retained for ______ years.

A

Once notified that taping is required, firms have 60 days to start taping and tapes are retained for three years.

96
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

97
Q

Emma is an RR who works primarily from her home. What address must be identified on Emma’s business cards?

A

The address of her branch office

98
Q

From what activity is an Assistant Representative for Order Processing (Series 11) prohibited?

A

Soliciting new accounts, soliciting transactions, and providing investment advice

99
Q

A registered employee of a BD is required to be ______________.

A

A registered employee of a BD is required to be fingerprinted.

100
Q

Within a BD, who is required to be fingerprinted?

A

All partners, directors and officers, as well as any employees who handle funds and/or securities

101
Q

If personnel are hired from disciplined firms, what percentage would require the firm to tape all phone calls?

A

20%

102
Q

Who must receive a benefit for an investment adviser to have an acceptable soft-dollar arrangement?

A

The investment adviser’s clients

103
Q

Define branch office.

A

A location where a member firm effects or attempts to effect securities transactions (e.g., solicitations/cold calls)

104
Q

If a producing manager is also the branch office manager, who supervises his activities?

A

A regional manager who is senior to the producing branch manager

105
Q

True or False: A business continuity plan must address how a firm will communicate with its clients and employees.

A

True

106
Q

What is the purpose of BrokerCheck?

A

To allow investors to obtain information about registered individuals in the securities industry

107
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.

108
Q

True or False: Without exception, an RR’s primary residence is considered a branch office.

A

False. A number of exceptions exist allowing RRs to operate from home without it being considered a branch office.

109
Q

True or False: An associated person whose registration is terminated must sign Form U5.

A

False. The former employer will provide a copy to the individual, but a signature is not required.

110
Q

True or False: Firms failing to adhere to the Taping Rule requirements could be disciplined under the Code of Procedure.

A

True

111
Q

True or False: A dedicated phone line between an adviser and a BD’s analysts is an accepted soft-dollar arrangement.

A

True. Dedicated phone lines would be acceptable as a means of expediting trades between an IA and a BD.

112
Q

True or False: A Series 6 representative may sell a closed-end fund in the secondary market.

A

False. Series 6 representatives may participate only in the initial offering of a security (primary market).

113
Q

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

A

True

114
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.

115
Q

If an RR leaves a BD and later wants to return without being required to requalify, she must do so within ____ years.

A

If an RR leaves a BD and later wants to return without being required to requalify, she must do so within two years.

116
Q

True or False: A business continuity plan must address the impact of a disruption on its critical business constituents.

A

True. A BD’s critical business constituents include banks and lenders.

117
Q

In a firm’s business continuity plan, how many emergency contacts must be provided?

A

Two, at least one of whom must be a member of senior management and a registered principal of the member firm

118
Q

A nonregistered, foreign BD provided research to a U.S. institutional client. May commissions be directed to the BD?

A

No. An agreement/understanding may NOT state that the U.S. client will direct commissions to the foreign BD.

119
Q

Who must be designated by a BD to oversee its supervisory control system and report the results to management?

A

A supervising principal

120
Q

As a condition of membership, who must be appointed to vote and act on a firm’s behalf in all matters concerning FINRA?

A

An executive representative

121
Q

After completing her Series 7 exam, Kate discloses several of the test questions to her coworker. Is this acceptable?

A

No. SROs consider the content of their qualification exams confidential.

122
Q

True or False: After termination of registration, an update of any subsequent disciplinary actions must be filed.

A

True

123
Q

True or False: If an RR works from her primary residence, her supervising branch office must conduct an on-site review.

A

True

124
Q

If a firm becomes subject to the Taping Rule, what may it do to avoid the taping requirement?

A

Terminate enough of the new hires to fall under the threshold

125
Q

How often must fee-based accounts be reviewed for suitability purposes?

A

At least annually

126
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.

127
Q

An RR leaves his firm to join the military. After being discharged, his special inactive status continues for ____ days.

A

An RR leaves his firm to join the military. After being discharged, his special inactive status continues for 90 days.

128
Q

What is required for a foreign associated person to be able to visit a client located in the U.S.?

A

He must be accompanied by an appropriately registered U.S. person.

129
Q

True or False: A BD’s business continuity plan includes the home addresses and names of key employees.

A

False

130
Q

What’s required if a producing branch manager’s sales activities involve error correction or change of client’s address?

A

Independent supervision by someone senior to the producing manager

131
Q

What is the purpose and responsibility of an OSJ?

A

To supervise RRs and associated persons under written procedures, review trades effected by RRs, and approve accounts

132
Q

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

A

Two years

133
Q

True or False: A misdemeanor conviction within the last 10 years is grounds for statutory disqualification.

A

False. A misdemeanor conviction will only result in statutory disqualification if it involved funds or securities.

134
Q

True or False: Provided the U.S. client is an institution, an associated person of a foreign BD may visit it alone.

A

False. To visit a U.S. client, an associate of a foreign BD must be accompanied by a registered person of a U.S. BD.

135
Q

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

A

Series 6 or Series 7

136
Q

To participate in a tender offer, what is considered equivalent to the stock?

A

Convertible securities, rights, or warrants of the issuer. Conversion/exercise is NOT required unless accepted.

137
Q

As it is used in the Taping Rule, define disciplined firm.

A

A firm that has had its registration revoked or has been expelled by an SRO

138
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.

139
Q

Within ____ days of notification that it is subject to the Taping Rule, a firm may reduce its staff to avoid the rule.

A

Within 30 days of notification that it is subject to the Taping Rule, a firm may reduce its staff to avoid the rule.

140
Q

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

A

False. The approval must be provided by an ROP.

141
Q

How often must all registered personnel participate in a compliance meeting?

A

Annually

142
Q

A firm that reduces its staff to prevent from having to tape its calls must wait _____ days before rehiring those RRs.

A

A firm that reduces its staff to prevent from having to tape its calls must wait 180 days before rehiring those RRs.

143
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.

144
Q

Where may Firm Element training occur?

A

On the BD’s premises, at a third-party vendor, or in a virtual, electronic classroom

145
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.

146
Q

A nonregistered, foreign BD provided research to a U.S. institutional client. May the firm initiate a follow-up contact?

A

No. It may not initiate a follow-up, nor may it induce the purchase or sale of any security.

147
Q

True or False: If a successful candidate discloses test information to a coworker who fails, no violation has occurred.

A

False. Both candidates may be disciplined for failing to maintain the confidentiality of the qualifying examination.

148
Q

If a registered person joins the military, what is her registration status?

A

She falls under the special inactive status designation.

149
Q

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

A

True

150
Q

What training would NOT be applicable for a BD’s Firm Element program?

A

Sales training

151
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

152
Q

A branch office must be inspected every ____________.

A

A branch office must be inspected every three years.

153
Q

Jim left the securities industry more than two years ago. Why may he be able to rejoin without requalification?

A

Jim may have been serving in the military

154
Q

What type of principal may supervise a representative who has Series 6 registration?

A

A principal with Series 24 or 26 registration

155
Q

A BD is managed by a Series 24 principal and a Series 26 principal. Who approves discretionary secondary-market trades?

A

The General Securities Principal (Series 24) is the appropriately registered person to approve the trades.

156
Q

What must be included in the records maintained regarding a BD’s Firm Element plan?

A

The plan’s content as well as the covered participants

157
Q

When a BD operates on a bank’s premises, what happens if a BD employee (also a bank employee) is terminated for cause?

A

The bank must be notified.

158
Q

What is the CRD system?

A

A system that pools information concerning the employment and disciplinary histories of registered persons

159
Q

What is an office that offers financial planning services and executes a few securities transactions per year?

A

A non-securities business office or non-branch office

160
Q

What is an office considered if its RRs make cold calls to prospective clients to solicit new accounts?

A

A branch office

161
Q

Within a BD, who handles accounts as an RR and also has supervisory responsibilities?

A

A producing branch manager

162
Q

True or False: Only the person who discloses specific items found on his exam is subject to disciplinary action.

A

False. The person who discloses the information, as well as the person who receives the information, may be disciplined.

163
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.

164
Q

Hank, an RR, was charged with misdemeanor DUI last week. Is this reported to FINRA?

A

No. Since the charge is a misdemeanor, SRO notification is not required.

165
Q

For what reasons may a BD be disqualified from SEC registration?

A

If within the last 10 years any officer or director has been convicted of a felony or securities-related misdemeanor

166
Q

True or False: Both Series 6 and Series 7 representatives may sell closed-end funds in the secondary market.

A

False. Only Series 7 representatives may engage in secondary market trading.

167
Q

If an RR works from home, what are the rules regarding her entry of orders and communications with clients?

A

Orders and electronic communications must be entered/sent through a system reviewable by her branch.

168
Q

What two choices does a firm have once it is notified that it has met the threshold established under the Taping Rule?

A

Begin taping within 60 days or reduce its staff level below the threshold within 30 days

169
Q

True or False: When a BD operates on a bank’s premises, BD employees are required to wear identifying badges.

A

False. However, specific signage is required to display the BD’s name.

170
Q

As stated in a BD’s supervisory program, with whom must the CEO annually conduct a meeting?

A

The BD’s Chief Compliance Officer (CCO)

171
Q

True or False: All registered personnel of a BD must complete the Regulatory Element of Continuing Education.

A

True

172
Q

What does a member firm’s supervisory program ensure?

A

Compliance with SRO rules and federal regulations

173
Q

When granting registration, FINRA considers a person’s __________, _________, and _________, but not education history.

A

When granting registration, FINRA considers a person’s experience, knowledge, and training, but not education history.

174
Q

Todd is a Series 7 registered representative. May he offer wrap accounts to his high net worth clients?

A

No. To offer wrap accounts, Todd would also need a Series 65 or 66 registration.

175
Q

True or False: A firm’s annual compliance meeting would discuss product knowledge.

A

False. Meetings focus on regulation and compliance (e.g., Internet communication or front-running on research reports).

176
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.

177
Q

What is included in the annual report created by the principal responsible for the firm’s supervisory control system?

A

Details of any tests conducted to gauge effectiveness and any changes made as a result of the tests

178
Q

If a BD operates on a bank’s premises, who must have access to the bank’s premises to inspect the BD’s records?

A

The SEC, FINRA, and the BD’s supervisory personnel

179
Q

What information is included on Form U5?

A

The applicable details regarding an individual’s termination (e.g., whether voluntary or involuntary)

180
Q

Relating to the potential statutory disqualification of an individual, what actions must be reported to FINRA?

A

Any disciplinary action, indictment, arrest, guilty plea, or conviction must be reported on Form U4.

181
Q

Firms subject to the Taping Rule must commence taping phone calls within _____ days.

A

Firms subject to the Taping Rule must commence taping phone calls within 60 days.

182
Q

True or False: Firms subject to the Taping Rule only need to tape the phone calls of RRs hired from disciplined firms.

A

False. BDs subject to the Taping Rule must tape the conversations all RRs have with existing and potential clients.

183
Q

Hank, an RR, was arrested and charged with grand theft (a felony). Is this reported to FINRA?

A

Yes. Since the charge involves a felony, SRO notification is required.

184
Q

Is a BD reimbursing the travel expenses to an investment seminar acceptable under a soft-dollar arrangement?

A

No. Reimbursement for travel expenses would not, but covering the cost of the seminar would be acceptable.

185
Q

True or False: An RR may handle his client’s funds and securities from his primary residence.

A

False

186
Q

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

A

A branch office

187
Q

What type of principal may supervise a representative who has Series 7 registration?

A

A principal with Series 24 registration

188
Q

For brokerage accounts opened on a bank’s premises, what client disclosures must be made verbally and in writing?

A

The securities offered are not insured by the FDIC, are not bank obligations, and are subject to investment risk.

189
Q

Once appointed as a principal, a candidate has ____ days to qualify for the position.

A

Once appointed as a principal, a candidate has 90 days to qualify for the position.

190
Q

True or False: A member firm is not required to disclose its business continuity plan to its customers.

A

False. Member firms must present the plan when the account is opened and thereafter upon request of a client.

191
Q

An office where fewer than ____ securities transactions are effected annually is a non-branch location.

A

An office where fewer than 25 securities transactions are effected annually is a non-branch location.

192
Q

True or False: FINRA notification is NOT required if an associated person is disciplined by another SRO.

A

False. FINRA must be promptly notified of such disciplinary action.

193
Q

To determine whether a branch is an OSJ, is the number of registered persons conducting securities business considered?

A

Yes. If a large number of people are involved in securities activities, regulators may require an OSJ designation.

194
Q

If a BD operates on a bank’s premises, what must exist between the BD and bank?

A

A written agreement identifying the compensation agreement between the two firms

195
Q

Give some examples of situations involving associated persons that require prompt notification to FINRA.

A

Changing primary address, loss of securities license, termination, felony conviction, internal fines exceeding $2,500

196
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.

197
Q

On what form does an employing BD report disciplinary actions?

A

Form U4

198
Q

Jim was convicted of insider trading and served a three-year prison term. May he now reenter the securities industry?

A

No. Statutory disqualification bars a person from the securities industry for 10 years from the date of the conviction.

199
Q

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

A

True

200
Q

What types of transactions may a Series 79 Investment Banking Representative advise on or facilitate?

A

Public or private equity or debt offerings, M&As, tender offers, asset sales, or business combination transactions

201
Q

True or False: A BD managing a discretionary account is considered to be acting as an investment adviser (IA).

A

True

202
Q

True or False: A member firm’s written supervisory program requires that all RRs be supervised by a principal.

A

True

203
Q

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

A

False, a Financial and Operations Principal performs that function.

204
Q

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

A

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

205
Q

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

A

A principal designation

206
Q

Describe the concept of a soft-dollar arrangement.

A

A situation whereby an IA receives research or other beneficial services from a BD in exchange for order flow

207
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.

208
Q

An investment adviser with more than $110 million under management must register with _________.

A

An investment adviser with more than $110 million under management must register with the SEC.

209
Q

Any trades effected by representatives must be approved _________ by a principal.

A

Any trades effected by representatives must be approved promptly by a principal.

Series 24 Group Share (42 decks)

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