Registration of the Broker-Dealer and Personnel Management Activities Flashcards
An agent made written disclosure to his employing B/D that he intends to execute a series of private securities transactions with individuals who do not have accounts with his B/D. The agent did not acquire express written permission from the B/D and did not receive compensation for executing the transactions but did receive written acknowledgement of receipt of the agent’s notice. In this case, the agent:
A. Is culpable of selling away.
B. Performed a matched order.
C. Is required to register as a broker-dealer.
D. Engaged in an agency cross transaction.
A
Even though he did not require permission, the fact that he executed the trades without permission still makes it “selling away.”
A RR is a limited partner in a limited partnership that owns a strip mall, and earns $2,500 per month in rental income. Which of these statements is most correct concerning this situation?
A. Prompt notification to the employer must be made in writing.
B. Employer notification or permission is not required. If the rep were active in the management of the mall, employer notice would be required.
C. Borrowing from a customer’s account without the customer’s knowledge but with the intent of paying the loan back in a timely fashion is allowed.
D. This is not permitted in any circumstances.
B
Which statements are true about the North American Securities Administrators Association (NASAA) and its members?
A. NASAA members register securities for sale in specific states.
B. NASAA members represent many of the largest BDs in the OTC market.
C. NASAA is composed of the state securities Administrators from all states.
D. NASAA members license BDs and their registered persons.
E. NASAA members have no jurisdiction over RIAs and IARs.
F. NASAA members may investigate securities-related crimes and impose both civil and criminal penalties.
A, C, D
LeRoy has 4 brokerage accounts with ABC Securities, with the following holdings:
A. Cash account in individual name, $350,000 in holdings including $125,000 cash.
B. Margin account in individual name, $250,000 in holdings including $80,000 cash.
C. Joint cash account (50-50 ownership) with his spouse, $425,000 in holdings including $60,000 cash.
D. Custodial account that he manages for his daughter, $85,000 in holdings including $12,000 cash.
Identify any amounts that are not fully covered by SIPC.
$100k of securities from A & B
Cash and margin accounts in the same name must be aggregated.
Which of the following job responsibilities at a broker-dealer require Rule 17f-2 fingerprinting, prior to employment?
A. Has access to securities or monies
B. Provides legal advice to the broker-dealer
C. Audits the broker-dealer’s books
D. Supervises securities sales
E. Sells securities
F. Secretary, makes entires on the firm’s books and records
G. Secretary, responds to customer mail and electronic communications
A, D, E, F
Remember the 4 categories of activities: 1) sells securities, 2) has access to securities/monies, 3) has access to original books and records, 4) supervises any of the above.
Form U4 is used for which types of registrations with a FINRA member broker-dealer?
A. Only initial registrations
B. Only single-state registrations
C. Only transfer registrations
D. Both initial and transfer registrations
D
What is the deadline for filing Form U5?
30 days
Who is responsible for filing and signing Form U5?
Registered principal
What is the deadline for sending the terminated individual a copy of Form U5?
30 days
What type of U5 filing is used to update an individual’s information, post-termination?
Amended filing
What is the
What is the records retention requirement for Form U5?
3 years after last use
Which of the following are SROs?
A. FINRA
B. NYSE
C. NASAA
D. SEC
E. MSRB
F. OCC
G. CBOE
A, B, E, G
SROs derive their authority from the SEC to sub-regulate the securities industry. The SEC itself is not an SRO.
What problem triggers a taping firm designation?
High % of registered reps associated with a disciplined firm
Which activities must be covered by written procedures related to taping?
Recording of all phone calls between all registered reps and clients
When must written procedures related to taping by implemented?
Within 60 days of FINRA notification
Which securities products can a registered rep sell with the following licenses?
A. Series 6
B. Series 7
C. Series 22
A. Investment companies
B. General securities
C. DPPs
The written plan for providing firm element training should consider the broker-dealer’s [____].
Size and type of business
Regulatory element training is delivered via [____].
FinPro
Failure to complete regulatory element training will result in the registered person [____].
being placed on CE Inactive status
Which are requirements to participate in FINRA’s Maintaining Qualifications Program?
A. Not be subject to a continuing education deficiency
B. Complete annually the required firm element CE program offered by the firm
C. Complete annually by Dec 31 the regulatory element CE program
D. Complete practical element CE annually
E. Reactive registration within 4 years
F. Pay an MQP fee of $100 per year
G. Pay a FINRA maintenance fee of $350 per year
A, C, D, F
Firm element training is not required. Reactivation of registration must begin within 5 years after the Form U5 is filed, otherwise registration status is not maintained and the candidate must requalify for registration by examination. There is no annual FINRA maintenance fee, only a $100 MQP annual fee.
Who reviews fingerprint cards?
U.S. Attorney General
How long are fingerprint cards kept by the BD?
3 years from termination from the broker-dealer
How long is a Form U5 maintained?
For 3 years from last use
For how long does a terminated individual remain subject to FINRA jurisdiction?
2 years
Is an individual considered a registered person after passing the SIE?
No
