Q&A3

Question 1

Deposits of currency exceeding $__ in a single day must be reported to [who] using [what].

The practice of depositing amounts under the reporting threshold is called ____. Amounts must be aggregated when reporting (so report all).

Answer 1

$10k…Tsy Dept…CTR

structuring

Question 2

Penny stocks

BDs must disclose amt of comp that __ and __ will receive for a penny stock trade.

Answer 2

BD and RR

Question 3

A revolving subordinated loan allows ___ to be made w/in first yr, with ___ approval.

Answer 3

prepayments…DEA

Question 4

Bids for NMS stock

> $1: min increments of $__
< $1: min increments of $__

Answer 4

> $1: min $.01

< $1: min $.0001

Question 5

Quiet periods

Two types after effective date of a mgd or co-mgd offering:

1. ___ cal days for IPOs; applies to ___
2. ___ cal days for secondaries; applies to ___

Answer 5

1. 10 cal days for IPOs; applies to all distribution participants
2. 3 cal days for secondaries; applies to mgrs/co-mgrs only

Question 6

Short interest reports must be filed with FINRA __ times each month by close of biz on the __ day after calculation.

Answer 6

twice…second

Question 7

U5 / RR departures

Firm must provide RR a copy of U5 w/in __ days of departure.

Firm must file updates if answers to certain disciplinary questions on the U5 change w/in __ days following termination.

Answer 7

30 days

30 days

Question 8

Counterfeit securities

If a principal discovers firm holds, must file report w/in [how long?] with [whom?].

Answer 8

w/in 1 day of discovery with issuer agent, FBI, SEC

Question 9

Research disclosures
1. When issuing a research report, firm must indicate if it was a mgr / co-mgr of ANY underwriting of company’s debt or equity w/in preceding _____.

Answer 9

12 months

Question 10

How soon are the following marginable?

1. ETFs
2. Mutual funds

Answer 10

1. immediately

2. after 30 days

Question 11

A block trade is generally defined as ___ or more shares, OR a trade having mkt value of $___ or more.

Answer 11

10k shares OR $200k

Question 12

Aged fail

Is a fail to deliver that has been outstanding for __ biz days or longer.

BD must deduct from its ___ a % of aged fails.

Answer 12

5 biz days

deduct from its net capital

Question 13

Taping Rule

1. Applies to firms w/ at least __ RRs where __% or more have been employed by disciplined firms.
2. If a firm terminates RRs to avoid being subject to the Taping Rule, it may not rehire those same staff w/in ____ or it will be subject to the rule.

Answer 13

1. 20 RRs where 20% or more…

2. 180 days

Question 14

A market maker is alone at inside market quoting Nasdaq stock at:
28.25 - 28.50, 10 x 50

It then receives two customer limit orders: one to buy 400 shares at 28.25, one to sell 500 shares at 28.50.

What is its quote after receiving the orders and treating them according to the SEC Display Rule?

Answer 14

28.25 - 28.50, 14 x 50

If MM is at inside and accepts customer limit order at inside, it must change its size to reflect customer’s interest UNLESS order is de minimis (10% or less of MM’s size).

Here, 400 shares > 10% of MM bid size. So that must increase to 14.

500 shares = 10% of MM offer size. So that may remain at 50.

Question 15

Rule 144

The amount of restricted securities that may be sold w/in a 3-month period is the GREATER of:
__% of the shares outstanding, or
__ for the previous 4 weeks

Answer 15

1% or avg weekly volume for previous 4 weeks

Question 16

Portfolio margining

Client must be approved for ___.

Eligible:

NOT eligible:

Answer 16

uncovered writing

Eligible:

• margin equities (incl ETFs)
• listed options (incl LEAPS)
• futures
• unlisted derivs
• warrants
• index warrants

NOT eligible:

• rights
• corp debt

Question 17

Tender offers

1. Schedule TO filed by ___ to provide terms of tx and other req’d info to shareholders.
2. Schedule TO filed by ___ to repurchase any FI securities.
3. Proxy statement filed if shareholders would be ___ on the MnA tax.

Answer 17

1. acquirer
2. issuer
3. issuer

Question 18

Pattern day trader

1. Is any customer who day-trades __ or more times w/in a __-biz-day period.
2. The min equity req’d for a pattern day trader is $__.
3. Buying power in a pattern day trader’s margin account = __x the maintenance margin excess.
   Ex: What is the day-trading buying power of an account that has a long MV of $170k and debit balance of $90k?
4. If buying power exceeded, must meet a day-trading margin call w/in __ biz days.
5. While margin call outstanding, buying power restricted to __x maintenance margin excess.

Answer 18

1. 4 or more times in a 5-business-day period
2. $25k
3. 4x
   Ex: SRO maintenance req = 25% of LMV ($170k) = $42.5k. So excess maintenance req = $80k - $42.5k = $37.5k. So buying power = 4 x $37.5k = $150k.
4. w/in 5 biz days
5. 2x

Question 19

In connection with an underwriting, if a member will be imposing a ___ or engaging in ___, it must notify FINRA for BOTH Nasdaq and OTC equity securities.

Answer 19

imposing a penalty bid or engaging in syndicate covering transactions

Question 20

IRA RMDs

First distribution must be made by ___ in the year AFTER the client reaches age ___.

For subsequent years, RMD must be taken by ___.

Answer 20

April 1…70 1/2

Dec 31

Question 21

Arbitration

A member must provide a customer a copy of a signed predispute arbitration clause w/in __ days of a request or __ days of the signing, whichever is earlier.

Answer 21

10 biz days of a request or 30 days of the signing

Question 22

Reg D

1. A ___ is a person who represents potential nonaccredited purchasers solicited to buy securities under Reg D.
2. Only offerings exceeding $__ specify need for investor sophistication or use of such a person.

Answer 22

1. purchaser representative

2. $5mm

Question 23

Ineligible issuers

1. Defined as such if filed for bankruptcy w/in past ___ years.
2. Ineligibility terminates if issuer files a registration stmt or annual report that includes ___.
3. Issuer could then conduct what type(s) of underwriting?

Answer 23

1. 3 years
2. audited financial statements
3. best-efforts or firm-commitment

Question 24

DNC lists

Requests to be placed on DNC list must be honored w/in ___ days.

Answer 24

30 days

Question 25

SRO maintenance req

Standard req:

1. __% on long positions
2. __% on short positions

For leveraged ETFs:

3. Multiply the __ by the standard req
4. Ex: SRO maintenance req on a $1mm purchase of a 2x Long Gold Index ETF = $__.

Answer 25

1. 25% on long positions
2. 30% on short positions
3. leverage factor
4. $500k (2 x 25% x $1mm)

Question 26

Blockbuster trade

1. Defined as a trade of $__ or more to be executed through a BD’s clearing firm.
2. BD given how long to accept / decline?

Answer 26

1. $1mm

2. 15 mins