Registration of Associated Persons (APs) Flashcards
This type of alcohol-related traffic violations is subject to FINRA statutory disqualification
Felony-level DWI
Note - in many cases first offenses for DWI do not rise to felony level
A S24 principal does not jurisdiction over these types of activities
Options (ROP) and financial / operations (FINOP) activities
The principal responsible for supervising a BD’s options business is
A registered options principal (ROP, Series 4)
The principal responsible for supervising a BDs financial responsibilities such as meeting the net capital requirement is
A Financial & Operations principal (FinOp, Series 24)
The persons to whom a firm’s chief compliance officer (CCO) may delegate responsibility for compliance oversight include
NONE. This responsibility cannot be delegated by the CCO
The four types of activities that require a partner, director, officer or employee of a BD to be fingerprinted are
SAAS
- SELLING securities
- Having ACCESS to securities or cash
- Having ACCESS to original books and records
- SUPERVISING any of these activities
An unregistered, non-supervisory employee of a BD who does NOT sell securities must be fingerprinted if he/she
has access to securities, cash or the firm’s original books and records
A BD must store fingerprint cards in an easily accessible place in this location
The BD’s Principal Office (Not necessarily its OSJ)
The period of time BDs must retain fingerprint records after a registered rep leaves a firm
three years following departure; two years in an easily accessible place
If a registered rep resigns while under investigation by his/her firm, the firm is required to
continue the investigation and, if necessary, update the rep’s Form U5 with the results
For a terminated rep, BD report results of investigations on this form
U5
Reps who leave the securities business are subject to FINRA jx and must make sure their FINRA files are accurate for this period of time after they leave
Two years
This is the period of time reps remain subject to FINRA jx after leaving the business (i.e. would need to notify of address changes w/in 30 days inside of this two year period)
When registered persons are required to complete regulatory element continuing education requirements
Annually
For a NEW registered rep, the first FINRA regulatory element CE requirement must be completed by
December 31st and every year thereafter
The content of a firm element continuing education program is created by
Each BD, based on its specific needs and business lines
A BD is advised to design its firm element CE program by considering factors such as
Scope of business
Size and structure of firm
Products and services offered
New regulations
Customer complaints
Regulatory exam results
The only permissible excuse for not participating in FINRA-required CE training is
Active military service
An individual who has been FINRA registered for three years is called into active military service for one year. The impact this will have on timing of CE requirements is
The obligation is suspended (“tolls the time”) for one year (or time of deployment). After military service ends, the individual has a 90 DAY grace period
The two components that comprise FINRA CE requirements
Regulatory element
Firm element
Form that must be filled to apply for RR FINRA registration
U4
Form that terminates RR FINRA registration
U5
Number of days a firm has to provide written notification of the termination of a representative to FINRA
30 days
Waiting period required before a second attempt on a FINRA qualification exam
30 days
Waiting period required after three unsuccessful attempts on a FINRA qualification exam
6 months
Required frequency for completion of regulatory element CE on an ongoing basis
Annually
Status of persons who have not completed regulatory element CE as required
CE Inactive
Frequency with which a member firm must complete a needs analysis and develop a written training plan for its firm element training program
Annually
RR must provide new employer with copy of Form U5 within
2 business days of request
If new info becomes known about a former RR, a firm must update which form
U5
This form registers representatives in the appropriate jurisdictions (e.g., states) and with SROs (e.g., FINRA)
U4
How many years of residential history and employment history is filed on the U4, respectively?
residential history = 5 years
Employment history = 10 years
What information is NOT disclosed on a Form U4?
1) marital status
2) educational background
Generally, when must ORDINARY UPDATES (e.g., change of address) wito the Form U4 be submitted?
within 30 days
Generally, when must updates relating a STATUTORY DISQUALIFYING EVENT (e.g., felony conviction) on Form U4 be submitted?
within 10 days
When on active military service…
Can you earn commissions?
Yes, BUT only with respect to prior sales
When on active military service…
Can you sell new products?
no
Inviduals are exempt from fingerprinting if their prints are illegible in how many reads?
after 3 rolls / reads
Who are fingerprints for U4 submitted to?
the attorney general of the US which delegates to the FBI
What conditions will lead to statutory disqualification for a rep in U4 process?
1) CONVICTED of certain misdemeanors (money or securities related) and ALL FELONIES (w/in last 10 years)
2) subject to temp or perm injunctions, expulsions, bars or suspensions from SROs (even if foreign)
3) Reps who “willfully violated” securities rules or laws (including false statements on applications)
How often must firms notify customers re FINRA Broker Check Hotline, the FINRA website address and the Investor brochure?
every year
Is a RR required to update Form U4 if settles securities-related litigation / arbitration?
Yes if matter is based on $15k or higher
Is a RR required to update Form U4 if FIRM settles securities-related litigation / arbitration?
Yes if matter is based on $25k or higher
Is a RR required to update Form U4 if firm internally sanctions him?
Yes if matter is based on $2.5k or higher
What series exam is required to sell securities to the public?
Series 7
Can a S24 principal supervise an options trading desk?
No - requires a Series 4 (Registered Options Principal)
Can a S24 principal supervise the financial processes of the firm?
no - requires a series 27 (Financial and Operations Principal)
Under the Traditional Qualification Termination Period, how many years is the SIE exam valid post termination? How many years are the rep and principal exams (6, 7, 79 and 24) valid post termination?
SIE is valid for 4 years and then need to re-take exam
Rep and principal exams are valid for 2 years and then need to re-take exam
To activate participation in the Maintaining Qualifications Program (MQP) you must…
within 2 years
1) elect to participant in the MQP via FinPro
2) complete all CE requirements available for rep or principal levels
If you are the the MQP how many years before you’d need to take requalifying exams (Assuming other requirements met)
5 years
What is the annual MQP requirements and by when must they be completed?
By Dec 31st of each year…
1) regulatory element CE training - education on rules, current issues & regulatory concerns
2) practical element CE training - education on products, services & strategies relevant to the job function upon return to industry as an RP
3) Pay $100 per year
NOTE - firms may require additional CE Firm Element trainings
True / False: If a registered rep is CE inactive, can they engage in or be compensated for any securities-related activities for the firm?
False
True or False: after a rep is suspended (after a FINRA hearing) the BD must suspend salary and commission but CAN continue to pay the suspended rep’s health insurance
true
A foreign associate of a BD can be registered as such and NOT required to take a qualification exam IF
1) they are conducting activities outside of the US only and
2) does not engage with any US citizen, resident or national
Example: a foreign associate could be the rep responsible for servicing account of a foreign national
Once active military service has ended, how long does a rep have before they are deemed to have re-entered the securities industry / subject to CE obligations?
90 days
FOREIGN BDs and their reps may engage in the following activities without SEC BD registration
1) effect UNSOLICITED transactions for any retail or institutional investors
2) provide research reports to major US institutional investors (>$100mm AUM) and effect transactions in the subject securities for those investors
3) solicit and effect transactions with foreign persons temporarily in the U.S. and U.S. citizens resident abroad
4) SOLICIT and effect transactions with institutional investors (NOT retail) WITH A CHAPERONE
