Q&A6

Question 1

Contact info

1. Firms must review FINRA contact info within ___ days after end of each calendar year.
2. Must also update FINRA no later than ___ days following any change.

Answer 1

1. 17 biz days

2. 30 days

Question 2

Subordination agreements

In order to qualify as part of BD’s net capital, agreement must be written for specific ___ and must indicate duration of the loan, which may not be for LESS than ___.

Answer 2

amount…one year

Question 3

Clearing BD must notify introducing BD’s CEO and CCO of reports it offers upon entering into clearing arrangement and no later than __ each subsequent calendar year.

Answer 3

July 1

Question 4

Military service

Special inactive status continues for __ days after discharge. So clock on requalifying by exam would not resume ticking till then.

Answer 4

90 days

Question 5

Rule 147

Investor who purchased under Rule 147 may sell to:

1. an in-state investor when?
2. an out-of-state investor when?

Answer 5

1. anytime

2. after 9 months

Question 6

Tender offers

1. Must remain open for at least ___ days from announcement to holders.
2. If % of securities sought, price offered, or dealer’s soliciting fee are increased/ decreased, offer must remain open for at least ___ days from notice of the change.

Answer 6

1. 20 biz days

2. 10 biz days

Question 7

Listing requirements

What is order from least to most stringent among following?

A. NYSE
B. Nasdaq Capital Market
C. Nasdaq Global Market
D. Nasdaq Global Market Select

Answer 7

B, C, A, D

Question 8

MOC / LOC orders

1. Can generally be cxl’d up to what time?
2. Can be cxl’d or reduced in size to correct a legit error up to what time?

Answer 8

1. 3:45pm

2. 3:58pm

Question 9

Taping

1. Firm may avoid taping requirements if reduces % of disciplined reps w/in ___ days of notification.
2. If staff not reduced below threshold, taping must begin w/in ___ days of original notification.

Answer 9

1. 30 days

2. 60 days

Question 10

Disqualification

When FINRA issues notice to a member of a disqualification, member has __ days to file application requesting relief or registration is revoked.

Answer 10

10 biz days

Question 11

Limited market security

When a security is quoted by fewer than __ MMs, it is considered a limited market security and is subject to a ___% haircut.

Answer 11

3 MMs….40% haircut

Question 12

Reg X

Pertains to ___ persons acquiring credit from ___ lender to purchase / transfer ___ securities.

Answer 12

US persons (here or abroad) acquiring credit from non-US lender to purchase / transfer US securities

Question 13

Reviews of offices

1. OSJs and supervisory branches must be reviewed how often?
2. Non-supervisory branches must be reviewed how often?
3. Non-branch locations must be reviewed how often?

Answer 13

1. Annually
2. Every 3 yrs
3. Periodically

Question 14

Fixed price offering

Selling concessions and discounts that would allow purchase of a fixed price offering below the POP may only be made to whom?

Answer 14

an underwriter, a syndicate member, or a selling group member

Question 15

OATS

BD required to transmit to OATS all order-related info by when?

Answer 15

8am on the calendar day following OATS business day (after the trade)

Question 16

When / as / if issued trades

___ determines if final form of the issuance or distribution is essentially the same as originally announced and will determine when trades settle (or if all trades will be cxl’d).

Answer 16

Nat’l Uniform Practice Committee

Question 17

Discipline

If an associated person is subject to action taken by a member and the fine is over $___, the member must promptly notify the SRO (e.g., FINRA).

Answer 17

$2,500

Question 18

Insider trading

1. CRIMINAL penalty = max $___ and/or ___ years in prison for individuals; $___ for corporations; proceedings initiated by ___
2. CIVIL penalty = max __ times the amount gained / loss avoided; proceedings initiated by ___

Answer 18

1. $5mm and/or 20 yrs; $25mm; DOJ

2. 3 times; SEC

Question 19

PIPE

1. BD acts as placement agent for the ___ securities of an issuer that already has publicly traded securities.
2. Once PIPE announced, co’s share price will usually ___.
3. ___ are frequent purchasers of PIPE offerings.
4. RR may both __ and __ IOIs to purchase shares prior to the PIPE offering.

Answer 19

1. restricted
2. decline (potential dilution + perception co needs capital)
3. Hedge funds
4. solicit and accept

Question 20

REIT

In its second taxable year, REIT must meet two ownership tests:

1. Must be at least ___ different shareholders; and
2. __ or fewer individuals may not own more than __% of its common stock during last half of taxable year

Answer 20

1. 100

2. Five or fewer…50%

Question 21

Margin

A customer who purchases or shorts more than $___ of stock in a newly established margin account must deposit at least that much.

Is this a maintenance requirement for a

1. long account?
2. short account?

Answer 21

$2k

1. no
2. yes

Question 22

Trading ahead

1. Exceptions for inst’l accounts with value of at least $___ (if customer has agreed firm may trade ahead?)
2. Can firms trade ahead of not-held orders?

Answer 22

1. $50mm

2. yes

Question 23

Rule 101 of Reg M

Actively traded securities = those with ADTV of at least $___ and issuer public float of $___.

Are actively traded securities subject to the restricted period?

Answer 23

$1mm…$150mm

No, not subject