Green 1

Question 1

Penny Stock

Compensation

Answer 1

Must disclose amount the BD and RR will receive.

Question 2

A Nasdaq market maker that withdraws its quote for a specific stock

Answer 2

Suspend for quoting that stock for 20 day

Question 3

If the broker-dealer crosses stock between two accounts the trade

Answer 3

s typically executed between the bid and ask prices. The firm is acting as a dual agent and each client is charged a commission

Question 4

How much buying power is afforded a pattern day trade

Answer 4

Pattern day traders are permitted to buy up to 4 times the amount of their excess equity (SMA) on an intra-day basis

Question 5

A reverse convertible security would be MOST suitable for an investor who is anticipating:

Answer 5

A stable value in the underlying asset

The risk is the decline in the asset. If the asset value rises there is no benefit to the owner

Question 6

dtc eligible

Answer 6

Corporate equities
    Corporate bonds
    Municipal bonds
    Money-market instruments
    Mortgage-backed bonds
    U.S. Treasuries and agency securities 

NOte: options are not

Question 7

Customer Order Protection Rule,

some exceptions whre a BD can trade ahead

Answer 7

The customer order is from an institutional account, defined as an account for (i) a bank, insurance company, S&L, or registered investment company, (ii) a registered investment adviser, or (iii) any other entity with total assets of at least $50 million.
Large orders, defined as orders for 10,000 shares or more and a value of at least $100,000, including those from retail customers

Question 8

carrying member may take exception

Answer 8

additional documentation is required (e.g., legal documents such as death or marriage records)
the account is flat and reflects no transferable assets
the account number is invalid
the Automated Customer Account Transfer (ACAT) is a duplicate request
the transfer violates the member’s credit policy
the client sends written instructions to rescind
the Social Security number or Tax ID numbers do not match (i.e., the number does not correspond to the carrying member’s number)
the account title is a mismatch
the ACAT has a missing or improper authorization

Question 9

sipic

Answer 9

Examples of separate capacities are:

individual account;
joint account;
an account for a corporation;
an account for a trust created under state law;
an individual retirement account;
a Roth individual retirement account;
an account held by an executor for an estate; and
an account held by a guardian for a ward or minor.

Question 10

market maker may be granted an excused withdrawal for up to

Answer 10

5 business days for technical issues such as system outages. This withdrawal period may be up to 60 calendar days for legal or regulatory issues. No SEC approval of the withdrawal is required.

Question 11

TRACE

Answer 11

bond trades

must be reported within 15 minutes if between 8 and 6:30.

Question 12

IPO Beneficial ownership exception

Answer 12

New Issue Rule, equity IPOs may be sold to an account if the beneficial owners are restricted persons and their ownership of the account does not exceed 10%

Question 13

Principal

Answer 13

Net PRice - Markup

Principal = no commission

Question 14

When are oats reports generated

Answer 14

The OATS business day runs from 4:00:01 p.m. on one market day to 4:00:00 p.m. on the next market day. OATS reports must be generated by 8:00 a.m. on the calendar day following the end of the OATS day.

Question 15

minimum standards for a stock to be classified as actively traded?

Answer 15

ADTV of at least 1,000,000 shares and public float of at least $150 MM

Question 16

Form 13G

Answer 16

passive investors with 5%

Question 17

restricted period distribution participants

Answer 17

5 days or
1 day for Public float between 25M and 150 ADTV 100K
None for activeley traded -float 150 mill adtv 1 ill

Question 18

Order Flow Reporting

Answer 18

Non-directed order flow must be reported quarterly by the sending firm. Market centers are required to report the percentage of trades that received price improvement monthly.

Question 19

Code of Procedures Deals with

Answer 19

The Code of Procedure deals with disciplinary action when a member firm or one of its employees violates SRO rules.

Question 20

arbitrator - simplified industry arbitrations

Answer 20

one non public arbitrator

Question 21

Rule 146 Offering outside of state vehicles

Answer 21

If a purchaser resides in another state but they buy an investment vehicle, a fund share etc, that bought the offering it is not a violation as long as the fund is in the state where teh offering was done.

Question 22

The statute of limitations under the Code of Arbitration is

Answer 22

The statute of limitations under the Code of Arbitration is 6 years from occurrence of the event

Question 23

When trading on a net basis for a client, the broker-dealer acts as

Answer 23

Principal

Question 24

Focus report 2A

Answer 24

quarterly introducing firms

Question 25

Futures and commodities contracts are not

Answer 25

considered securities and are regulated by the CFTC not the sic

Question 26

UPC

Answer 26

setllement and clearing between foirms

Question 27

COA

Answer 27

Monetary disputes between members

Question 28

COP

Answer 28

Disciplinary procedures

Question 29

Rule 506 Regulation D offering.

Answer 29

an unlimited number of accredited investors may participate but there is a limit of 35 non-accredited investors who may take part in offering.

Question 30

PEO AND PFO are synonymous with

Answer 30

CEO and CFO

Question 31

The Customer Limit Order Protection Rule (the Manning Rule) requires that a market maker holding a customer limit order for a Nasdaq stock execute that order within:

Answer 31

immediately which generally means 60 seconds

Question 32

May the CFO of the issuer of a private placement act as a purchaser representative in a Reg. D offering?

Answer 32

A purchaser representative may not be an affiliate, director, officer, or employee of the issuer unless related to the purchaser by blood, marriage, or adoption