Missed Qs Flashcards
The spread is the difference between the price paid to the issuer by the underwriter and the public offering price. If the issue were receives $9 per share and the public offering price is $10 per share, how much is the spread?
1$
Initial public offerings are made ____ initially. Once the offering is complete, the shares are generally listed on ______
OTC initially - not on exchanges until offering is complete
Prospectuses cannot be used for more than _____ months without revision and cannot contain information older than_____ months
9 months and 16 months
A listed company has asked a broker dealer to buy its own shares in the market under a treasury stock repurchase plan. Inside market in the stock is $15.00-15.25. The last reported sale of the stock occur at $15.10- at what price can the stock be purchased?
$15.10 or lower because the last reported sale is 15.10 and this is the higher than the current independent bid of $15. The stock can be purchased at 15.10 or lower.
A broker dealer that is a member of a syndicate may purchase the securities in the market for its own account during the underwriting period ______
Under no circumstances
They can buy it when the syndicate is disbanded
A “_____” is a firm that finds a company that wishes to go public and introduces that firm to an underwriter
Finder
Finders are deemed to be industry “insiders” and cannot be compensated with _______
IPOs of common stock
A web front can be used to make an online offer of a private placement under reg D only if ____
Access to the site is password protected
Thats bc they need to be prequalified that ensures they are accredited - this is not a self- accreditation because the SEC does not allow this- the BD must perform due diligence to make sure they are verified
An issuer has filed an S-1 registration statement for an IPO. During the cooling off period the underwriters have found unexpectedly high investor demand for the issue. The issuer would be required to file an amended S-1 for the offering if the size was increased by ____
20%
(Basically more than the 15% for the green shoe clause)
The basic rule is that there is a_____% limit on underwriting fees or anything similar or related
10%
There is a____% limit on offering expenses that are reimbursed from the proceeds of the offering
5%
The maximum amount that can be raised under Regulation crowdfunding is:
$5 million
The maker of a takeover offer must be concerned with which regulations?
SEC rule 145, SEC regulation MA and Hart Scott Rodino act
_________ is designed to improve corporate auditor independence, speed up corporate reporting of significant events and reports of trades, to minimize conflicts of interest between a broker dealers research departments and corporate issuers, and between a broker dealers research department and it’s investing department
Sarbanes Oxley
If a new issue is “hot” an issuer may NOT direct sales of that issue to:
Finders, member firms, fiduciaries and institutional portfolio managers who wish to buy personally
Finders are basically security industry insiders, which makes them prohibited
A financial advisor wants to sell an IPO to a retail customer. IPOs can be offered to customers who:
Only be offered to customers who in the past 12 months have signed a representation that they are not restricted from buying IPOs
Does verification must be retained for three years by the member firm
An underwriter participation in an eastern account underwriting is completed when:
The managing underwriter terminates the syndicate
An ISSUER can direct shares of a “new” issue to everyone except _____ of the UNDERWRITER
Employees
The FINRA corporate financing rule allows an issue of securities that are “hot” to direct sales of that issue to a:
Divisional President of the issuer
Sale of the issuer shares to FINRA members, their employees, finders and fiduciary are all prohibited under the FINRA IPO rule- the only exception here is if it is the IPO of a privately held FINRA member firm that is taking itself – in this case, the officer is an employees of the firm can buy the shares
Under rule 144, a member holding a sell order for “144” shares may solicit:
The issuer for purchase of its outstanding on registered securities
It makes no sense for a member holding a sell order to contact another individual who wishes to sell – he wants to find someone to buy the stock
Which business form does NOT permit flow through of gain and loss to owners?
Mutual funds regulated under subchapter M
An underwriter is offering common stock of ABC corporation in a primary distribution. ABC is a newly formed company that has never had registered shares outstanding. A dealer who subsequently sells ABC stock in the secondary market, must furnish a prospectus to any purchaser for:_____ days
90 days following the effective date
Under SEC rules, a customer is considered to be ______ only to the extent of his _______ position in a security. It makes no difference that the positions are split among different accounts at the brokerage firm.
Long ; net long
The SEC defines a graphic communication as a written communication. The SEC list of graphic communications includes any form of electronic media, including videotapes, audio, tapes and facsimile, CD ROM, electronic mail, Internet, websites, and computer networks. ; these are also called:
Free writing prospectuses
If a member firm changes it designated principle responsible for overseeing the firms, AML program, what needs to happen?
FINRA must be notified promptly via the FINRA Contact system no later than 30 days
FINRA dues are based on an annual membership_____, and annual fee per______, an annual fee per________ and a percentage of all______ securities income of the member and income exchange trades
Based on an annual membership fee, an annual fee per branch office, an annual fee per registered individual, and a percentage of all over the counter transaction income of the member and income from exchange trades
A registered representative who has been called for active duty, can share commissions during the period of military service with another representative at the same firm if:
They handle that representatives customers, and they have to be at the same broker dealer
If a broker dealer finds that information filed in its Form BD is inaccurate or incomplete for any reason, it must amend the filing_______
Promptly
If it registered person terminates association with a broker dealer, firm, and reassociate after two years of termination, that person is subject to the regulatory element of continued education on a cycle based on_______
Based on reassociation a.k.a. the most recent registration date
SIPC logo is required to appear on ________ written communications by a BD
Advertisements
Under FINRA rules, repurchase agreements between members or members and their customers are ______ only if the securities that are the subject of the agreement are exempt
Permitted
Exempt securities include government, muni’s, agency
Under the investment company active 1940, distributions must be distributed_____
Annually
Once mutual fund physicians have been held for 30 days, the SEC permits them to be sold on margin at ____% loan value
50%
Investment advisors must register with the ______
SEC
Under the FINRA conduct rules, the maximum sales charge that can be imposed on a single purchase of a variable annuity is________
An amount that’s fair and reasonable
Closed end funds are _______ from redeeming their shares
Prohibited
To retire shares, the company would have to announce a tender offer or buys its shares back
A pre-recorded phone call that informed the recipients of general market conditions is an example of what type of communication?
It is technically retail communication, but is managed in the same manner as Correspondence
If a register representative wants to post business related static content on social media, this communication requires:
Approval by principal prior to use
This is because since it is static, it means it will be available for the long-term, meaning it can be seen by a large number of individuals and that is retail communication and that requires preapproval
True or false: 12-b1 fees cover costs of mailing prospectuses to current clients
False
Mailings to current shareholders are not deductible under this plan because it is not aimed at increasing the size of the investor base in the fund since they are already clients
It would cover it if they were potential clients
A registered representative can borrow money from a customer that they have an outside business with that’s shared 50/50 IF:
As long as the member firm is notified in writing and the member preapproves
In a business continuity plan, the member must provide the possibility of significant business disruption, and how the member plans to respond to events. It must also include a plan recovery time from each scenario and whether it plans to continue in business during the scenario.
Does it need to provide the contact information of the plans to emergency contact people?
No
These individuals are provided to FINRA, not the customers
A Nasdaq stock that is treated outside of regular market hours where the trade is required to be reported that day will be reported to the tape with a _____ modifier
“t” modifier
A customer that is placing an order to buy 1000 shares of the stock at $16.111 would be _____
Rejected bc you can’t accept sub-penny orders on $1 or more
An ADR is secured by shares of a_______ company, and then the ADR is listed and trades in the US market
Foreign
TRF reports trades of Nasdaq listed issues in the _____
ADF
Under the provisions of the Uniform Practice Code, if a buying broker dealer receives a partial delivery of 200 shares out of a round lot purchase of 500 shares, the buying broker dealer must:
Accept partial delivery
They must accept it as long as it is in round lots, and the member must set up a fail to receive for the balance of securities that have yet to be delivered
If a firm has received a limit order to buy stock for a customer, the firm may ____
Sell bc it’s not competing with that customers order
An order that can be executed at multiple price levels is termed a___order
Sweep
In a falling market, open _____ and _____ will be executed
Open buy limits and open sell stops
(OBLOSS)
True or false: Reg SHO applies to trades that are agreed to in the US, even if it doesn’t take place in a US market and is subject to the documentation requirements
True
Order tickets must be filled out ____ to order entry
Prior
Form 13G is typically filed by _____ investors
13D is typically filed by _____investors
Passive ; active
Upon execution of a MMPO (market maker peg order), the market maker must :
Submit a new peg order
A mutilated security is considered a good delivery if validated by the ______
Issuer or transfer agent
If a market maker attempts to lock the market during Nasdaq operating hours, the system will :
Route the order for execution at the locking price
Marks to market can only be claimed by the _____ part
Unsecured
Market peg order to buy tracks the national best ___
Offer
Tape recordings are kept for ____ years
3 years
SMA is the same name as ______
Market value
The 5% policy is part of the ___
FINRA conduct rule
If ands choose to compute the reserve requirement monthly, the deposit is ____%
105%
The ____ enforces the cold calling rules
FTC-
If a broker dealer has customer orders whilst also has a proprietary trading desk, their orders are treated:
Secondary because it would be trading ahead otherwise
The managing underwriter usually acts as the the _________market maker
Stabilizing
written POA is not required for a RE to chooose what:
Price and time of execution
Remuneration received by a member is also called
Commission
Research personnel can inform an issuer that a BD is going to _____ coverage bc of a management decision to stop following that industry
Terminate
PIPE offering require suitability to be applied to :
Both accredited and non accredited customers
Daily logs (aka blotters) kept for
6 years
Pre hearing conference must be held within ____ days of the respondents answer to the complaint ?
21 days
If, in the course of settlements, securities are suspected to be stolen, a report must be filed with the SIC within_____ business day(s) of discovery
One business day
A branch office manager (BOM) is supervised by a
Regional sales manager
Unregistered shares are also
Restricted
Face amount Certificate Company, UIT, and management companies are all:
Investment companies
Currency transactions are also called ____ transactions
Cash
A bona fide customer is someone who
Has cash or securities held by the BD
Structured products are _______ and have a ______ maturity date
Not standardized and have a fixed maturity date
Call options cannot be _____
Tendered
A member firm has 30 days to pay an arbitration award. If the firm fails to pay an award resulting from an arbitration decision within that 30 day window, then FINRA can give written notice that it will suspend or revoke the firm membership if the award is not paid in another_____ days
15 days
to qualify for a NASDAQ listing, an issuer must file all reports sent to _______ concurrently with _____
Sent to the SEC concurrently with FINRA
Customer account records must be maintained for_____ Years
6 years
DMMs are _____ from fidelity bond coverage
Exempt
An unregistered foreign finder that directs business of customers to a member firm where both the finder and the customers are for nationals may________From the member firm
Only receive transaction based compensation
When a firm’s AI/NC ratio is falling, its financial conduction is_____
Improving
If the SEC sends a deficiency letter to the issuer regarding registration, then the _____ is not considered adequate
Disclosures
Green shoe clause is used in an ______
Over-sale ( not under sale)
SAR reports must be filed with FinCen within ____ days
30 days
If in a calendar quarter a FINRA member firm’s in house trades account for 1% or more trading volume of an exchange listed issue, the member firm must begin publishing and disseminating quotes on_____
CQS
Order of operations for when a security is suspected as stolen is:
Tell FBI first and promptly
Then Tell SIC and transfer agent within one business day of discovery
The Trust Indenture Act of 1939 applies to non-exempt debt issues whose dollar value is at least
$50,000,000
Fairness opinions are issued by investment bankers for the fairness of ______
Proposed transaction price of mergers , acquisitions, takeovers of another company
The FINRA system for electronic capture and recording of order info is ___
CAT
Access equals delivery means:
Delivery of an electronic prospectus (as opposed to paper)
And is not permitted for mutual fund shares (they need paper)
True or false : SIPC covers security accounts, including individual non securities credit account
False - this is a non security account
Under the Conduct Rules, FINRA prohibits a member firm from selling a foreign security for a customer if the firm has a fail to deliver in that security that is older than:
90 days
(60 days for non foreign )
Reports of cash transactions must be made to FinCEN for $ _____
$10,000 (CTR)
In tender offers, you need to EXERCISE is required for what type of security?
Call options
True or false: 80% of the issuers employees need to be based in state for Rule 147
False - just the majority
Broker dealers must review excess or deficit security positions in segregated accounts:
Daily
An outdated manual must be retained by the member firm for ___ years
3 years
An established customer that is exempt from the provisions of the “penny stock rule” applies to those who have had an account at the firm for at least 1 year, have already signed 3 suitability determinations, and customers that are effecting transactions in penny stocks that are_______
Unsolicited
Under the provisions of the customer protection rule, short securities differences must be bought in no later than_____ calendar days after discovery
45
True or false: cash dividends that a customer receives will change the SMA balance in a long margin account
True
If a person holding rule 144 stock is unaffiliated with the issue for at least____ months, after having held the securities for at least_____ months, the volume limitations and reporting requirements that apply to the selling of the shares are then lifted
Unaffiliated for at least 3 months and after having held the security for at least 6 months
Reg S provides a safe harbor exemption from registration for offerings of securities made by US issuers to_____
Non US issuers
This allows US issuers to sell unregistered securities outside of the United States to non-US residents without having to register those securitiess
There is no “_______” provision in the supervision rule for conducting physical inspections at OSJs with lesser or greater frequency
Risk based
Determination is made by NASDAQ upon review of a complaint about a clearly erroneous trade may be appealed to the:
MORC – the market operations review committee and it must be made within 30 minutes of receipt
Subordinated loans are “_____” to the lender and NOT aggregate indebtedness
At risk
Fail to delivers that are older than 5 business days past settlement means that the position must be marked to the market and take a ___% haircut
15%
The underwriting agreement is a contract between the issuer and the syndicate _____
MEMBERS (not manager)
Annual testing of a member firms AML program may be conducted by:
A qualified outside party or member personnel
True or false: UITs have a board of directors
False- they have a board of trustees
True or false: the DTCC handles listed options
False - that’s the OCC
The underwriting spread is the amount received by:
The managing underwriter
The withdrawal of funds does what to a clients SMA?
reduces SMA
The ACAT system is used to _____ client positions
Transfer client positions
An introducing BD with $5,000 net capital is permitted to _______ margin trading to customers
Recommend
Regulation MA includes _____ offers
Tender offers
Under the provisions of Rule 15c3-3 Customer Protection Rule, securities included on the BD books and records as failed to receive for more than ______calendar days, needs to be bought promptly
30 calendar days
45 days for short securities
Reg A distributed of promotional material is permitted prior to the filing of the Form 1-A and all through the ____ day SEC review period
20 day SEC review period
A third market trade takes place on the New York Stock Exchange issue that is quoted on CQS. Where is this trade reported?
ACT within 10 seconds
Quotes displayed in the ADF are from ________
Unlinked ECNs
Under the buy-in procedure permitted under the FINRA uniform practice code, a contract may be closed by purchasing the issue for______ at the current market value
Cash
IPO purchases of common stock from underwriters does not consider the self supporting spouse of a bank president, who is permitted to buy the issue, as an_______
Insider
Reg T requirement is for customers to pay for a purchase in a cash account within
3 business days of the trade date
True or false: wholesalers fees are included in underwriting compensation
True
Hard copies of fingerprints cards must be maintained at
The firms PRINCIPAL OFFICE!!! Not OSJ
A delayed delivery is also called a ______ option
Sellers option
What is the reporting threshold on form u-4 for arbitration awards?
$15,000
_______ must adhere to the requirements when an issuer seeks to obtain listing on Nasdaq
Market makers
the Central Registration Depository CRD (U4) is used to process applications for agent registrations for the states + processing applications for agent and BD registration withdrawals. If any info on an individual Form U4 changes, __________ must be filed promptly
Amendment
There’s an ____ for foreign broker dealers getting an underwriting discount on shares of a new issue
Exemption
Foreign government bonds are not ______ eligible securities
DTC
Who’s responsible for ensuring the accuracy of a trade report between a clearing and non clearing firm?
Both
Supplemental MPIDs can NEVER be used for______________
Engaging in passive market makings or stabilizing bids
These always need to be made by primary MPIDs
If a market maker is at the inside market and accepts the customer limit order at the inside, it must change its size to reflect the customer’s interest unless_______
The order is de minimis (10% or less the market makers size)
MOO ( market on open) orders may be modified up until :_____ am
9:28am
Customer Order Protection Rule is : _______ shares or $_________
SEC Limit Order Display Rule is:
_______ shares or $__________
10,000 shares or $100,000
10,000 shares or $200,000
If one broker dealer sends another broker dealer a mark-to-the-market the amount of cash required must be deposited_______
As promptly as possible (not immediately)
A member firm must begin deducting from net capital a short securities difference, which is unresolved for more than_____business days
7 business days
A fidelity bond does NOT cover ______
Errors and omissions
You must disclose _____ year residential history and a _____ year employment bankruptcy history
5 year residential
10 year employment and bankruptcy
When two broker dealers, enter a transaction, written notice of buy-in is required to be delivered to the office of_______ not later than noon_______ business days before execution
Office of the seller not later than noon 2 business days before execution
Secondary market trades involving CMOs and CDOs must be reported to TRACE within
60 minutes
Whether or not a broker dealer will profit on the transaction based on its inventory cost, is _____ relevant to calculating markups
NOT RELEVANT
If a firm wants to pursue eligibility proceedings for statutory disqualification members, it must file a_____ application within 10 business days
MC-400
The husband of a registered rep may purchase shares of an initial public offering if______
The allocation was issuer directed
The maximum criminal penalty for an insider trading violation by a corporate entity is $_____
$25 million
NYSE IPOs distribute prospectuses for ___ days
25 days
Regulation FD applies to
Issuers
Tender offers are NOT considered
Distributions
When a member firm has decided to terminate its research coverage on a company, it must provide a ______
Final report
A carrying broker dealer that RECEIVES or HOLDS customer funds and securities is required to have a minimum net capital of :
$250k
True or false: routing instructions would be on the order ticket
False
The ______ instructions issued to the transfer agent ensures that no premature regulatory resales of Reg D securities occur
Stop transfer
