Registration of a Broker-Dealer Flashcards
Which form is used to register BRANCHES of a BD w the SEC?
Form BR
Which form is used by a registered investment adviser to register with the SEC or state securities Administrator?
Form ADV
Which form is used by BDs to submit a request to terminate their SEC registration or FINRA membership?
Within how many days post Form NMA must the form be filed?
Form BDW
Must be filed within 30 days of Form NMA submission
What is a written description of a BD’s operational and internal control systems?
Written Supervisory Procedures or WSPs
Which form is used to apply for initial FINRA membership?
How long does FINRA have to review once substantially complete?
Form NMA (New Member Application)
180 CALENDAR days
Which form is used by BDs to apply for SEC registration?
Form BD
What is FINRA’s central licensing and registration database for the securities industry?
CRD (Web CRD) or Central Registration Depository, which contains the registration records of BDs and their associated persons
How often BDs must notify customers about the existence of the BrokerCheck hotline and website?
At least once per year
What is the FINRA website on which the public can find info about a registered rep’s employment history and securities licenses?
BrokerCheck
Where the data made available to the public on FINRA’s BrokerCheck website is stored?
Is all of the data publicly available?
On FINRA’s Central Registration Depository (web CRD)
BrokerCheck contains a limited set of CRD data; full CRD Data is only available to firms and regulators, not the public
BrokerCheck provides a full report on individuals who have been securities-registered within…(what time period)
Last 10 years
Who may access FINRA’s Central Registration Depository (WebCRD)?
Only firms and regulators, not the public. A LIMITED set of CRD data is available to the public on BrokerCheck
Which types of CRD data on registered persons the public can access on BrokerCheck?
Qualifications, employment history and disciplinary actions
On BrokerCheck, a member of the public can check a broker’s employment history over what period of time?
the last 10 years, as reported on broker’s form U4
Both full and part time employment, inside and outside the securities industry, are reported on BrokerCheck
For a registered rep who participates as a reserve in the Army National Guard, FINRA dues and assessments are waived if…
The rep is called to active military duty. Reserve duty ALONE does NOT impact FINRA dues, assessments or CE requirements
When is a BD required to provide a FINRA website address on its website?
When is discloses on the website that it is a FINRA member
When must a BD’s Business Continuity Plan (BCP) be provided to a member of FINRA’s staff?
Promptly upon request
For BDs, the main advantage of adopting a risk-based system of compliance review is…
Efficiency. Because the system focuses on those areas posing the greatest potential risks, each and every transaction does not need to be compliance-reviewed
Under FINRA 3110, the person who is required to review all investment banking and securities transactions for compliance is…
A registered principal (S24)
This Act protects customers from the bankruptcy or financial failure of BDs
Securities Investor Protection Act (SIPA)
What is the maximum coverage per account with a Securities Investor Protection Corporation (SIPC)?
$500k
What is the maximum amount of cash claims per account with a Securities Investor Protection Corporation (SIPC)?
$250k
What is the role of General Partner in a Limited Partnership?
Manages day-to-day operations, potentially has unlimited personal liability
What is the role of Limited Partner in a Limited Partnership?
Silent partner; has limited liability
What are the registration steps with FINRA for a BD?
- Submit a new member application (via Form NMA) to FINRA
- Pre-membership interview (btwn BD and FINRA)
- 30 Day Waiting Period (Once deemed complete application)
- Approval to conduct securities business (can be qualified)
Note - if FINRA needs more information, members have 60 days to provide
How many S24 principals must a new BD applicant have?
two (One of whom is a member of senior management)
Upon SEC registration, after what period will FINRA inspect a BD for net capital compliance?
6 months
Upon SEC registration, after what period will FINRA inspect a BD for GENERAL compliance?
One year
What conditions will result in Statutory Disqualification of a BD w FINRA?
1) Expelled or suspended parties by another self regulatory organization
2) Subject to an SEC order denying , suspending or revoking registration
3) That willfully filed a false application for membership
How many standards of membership must potential BDs adhere to under FINRA?
Must adhere to 12 standards of membership
What is the definition of a broker dealer (BD)?
Any person effecting securities transactions
What is the definition of an investment advisor?
any person who sells investment related ADVICE
A branch office that relocates must notify FINRA in how many days?
30 days
If FINRA determines that a BD has not commenced business operations within 6 months of SEC registration, its net capital compliance inspection will be delayed how long?
6 months
If a BD fails and SIPC takes over customer claims / return of assets, how are accounts valued?
Based on the market value of the securities as of the court filing date
True / false: the SIPC covers investors if an ISSUER commits fraud
false - SIPC covers only if a BD is insolvent or a BD commits fraudulent activity and uses investor funds
What types of accounts are NOT covered by SIPC?
1) commodities
2) futures accounts
3) accounts of senior officers and directors of BD
4) long market value in a margin account (although equity is covered)
What types of BDs are EXEMPT from SIPC membership?
1) firms whose principal business is conducted outside of the US and territories
2) firms who JUST distributes shares of a) mutual funds, b) unit investment trusts or c) insurance products (e.g., variable annuities)
