Regulations - FINRA Rules Flashcards
Any person who solicits orders to buy or sell securities must be _______, as is anyone who makes a recommendation or performs a _______ determination
registered; suitability
If a sales assistant wishes to write an order ticket, they must take the _____ - they cannot receive commissions or comp for business production
Series 11
To be registered, you must complete a ____ form with employment history and residence history
U-4 form
A person is subject to statutory disqualification if he/she has:
- been suspended or expelled from any other SRO (US or foreign)
- is subject of an SEC order suspending or revoking registration
- willfully filed a false or misleading application
- willfully violated securities or commodities laws
- has been convicted or any securities or “money” related misdemeanor or any felony within the past 10 years
- have been temporarily or permanently enjoined from engaging in the securities business
Any dispute between a RR and the firm must be handled through _____
bind arbitration
For any “intra-industry” disputes, the arbitration panel must consist of ____ “non-public” arbitrators
3 non-public arbitrators
Any outside employment is shown on the employee’s _____ form
U-4
Regulatory element CE is required on the registrant’s _____ anniversary and every _____ after that
2nd anniversary and every 3 years after that
Firm element CE is required _____
annually
If you leave for active military duty, you registration becomes _____ and when you return it is reinstated
inactive - firm has to send a letter to the CRD
If a person is terminated, a ____ form must be filed with FINRA within _____ of termination. A copy of the form must be supplied to the individual
a U-5 form, within 30 days
After ____ years without being associated with a firm that person must retake the appropriate exams
2 years
You cannot _____ your licenses with a firm to keep registrations current after leaving the business
“hang”
Firms must file _____ with FINRA regarding suspicious events as they are ______
must file reports as the events are happening
If a RR has made a violation, the firm must notify FINRA no later than _____ after the event happened
30 days
RR are prohibited from giving or receiving gifts in excess of ____ per person per year related to work.
$100
The gift limit does not prohibit ________
customer entertainment
Gift records must be maintained for ____
3 years
Paying for work (work done by a customer for a RR) is permitted if there is a _____ agreement and it is approved by the _____ of the firm
written agreement approved by the principal of the firm – records must be kept for 3 years
“Correspondence” is defined as any written or electronic communication made available to _____ or fewer retail investors within any _____ period
25 or fewer within any 30 day period
Firms must retain both ____ and ____ communications if you use the same phone or email address
business and personal
An RR can open a joint account and share in P&L with a customer with express _____ approval
written
For joint accounts with a customer where there is profit sharing, must share in proportional P&L to capital contributed UNLESS that customer is a _____
family member
An RR cannot borrow or lend to a customer UNLESS they are a _____ or ______
family member or borrowing institution
Lending/borrowing is approved (if have prior approval of the member firm) between: ____ RR at same firm; a ______; and a customer with which you have a ______
2 RRs at same firm; significant other; customer with whom you have a business relationship
An RR cannot share commissions with someone who is not _______
registered
“Selling away” is when an RR effects a transaction at _____
another firm
FINRA only allows Cash on Delivery transactions if:
- the firm has a record of the name and address of the agent and the customer’s account number at the agent
- order ticket notes COD
- confirmation is mailed no later than the next business day to the customer
- firm has obtained an agreement from the customer that he has instructed the agent to pay when the securities are delivered
Any control relationship between the firm and the issuer must be ______; typically verbally at time of recommendation and then again with a _____ disclosure on the trade confirmation
disclosed, verbally then with a written disclosure
If a firm is publicly traded, then orders to buy their stock cannot be ______
solicited
A RR cannot give _______
investment advice
If a customer consents to arbitration, the panel consists of a majority of _____ arbitors
public
For purchases of IPOs, customers must sign a statement that they are not restricted during the _____ preceding the first IPO purchase, then _____ thereafter
12 month; then annually thereafter
The three types of communication as defined by FINRA are:
- correspondence
- retail communication
- institutional communication
Correspondence (25 or fewer retail clients within a 30 day period) is _____ subject to FINRA filing rules.
NOT
Retail communication is to ____ or more retail clients within a 30 day period.
25 or more - must have less than $50m in assets
Institutional communication is made available only to _____ clients
institutional (anyone with $50m or more in assets)
The four types of retail communication are:
- advertising (intended for mass market)
- sales literature (directed at a specific audience)
- independently prepared reprint (a reprint of excerpt of any article where publisher is not affiliated with a FINRA member and report was not commissioned by a FINRA member)
- Public appearance
In communications, you can say that the ____ is a FINRA member but no the ____
the firm is a FINRA member, not the RR
Copies of communications must be kept for ______
3 years
Research reports must be written or approved by a FINRA qualified _______
supervisory analyst
A member firm acting as a manager or co-manager in an underwriting syndicate cannot issue a research report on that company for _____ following the effective date for an IPO and _____ following the effective date for a follow on offerin
10 days; 3 days
If a recommendation is made, it must be disclosed if the member organization or an affiliate owns more than ____ of the common stock of the issuer
1%
It must also be disclosed, if making a recommendation, if the member firm has performed or is expected to perform IB services within the past ____ or future ____; or if they have received compensation from equity offerings in the past _____
in the past 12 months or future 3 months, or if they have received comp from equity offerings in the past 12 months
The SEC defines a research report as any report that provides enough information to make an ______ and is distributed to at least _____
make an investment decision and is distributed to at least 15 people
If a RR gets a 3rd party research report to give to a client, it must be approved by the _______
supervisory analyst
Research reports, along with corresponding communications and approvals, must be kept for _____
3 years
Reg AC stands for _____
Analyst Certification
Whenever a research analyst makes a public appearance, a record must be made within _____ of the end of that calendar quarter which includes a statement by the research analyst that the views are his own and that they aren’t compensated for their views
30 days
If a complaint is filed with the District Hearing Panel, at least _____ notice must be given to both parties
1 month’s notice
If either party is displeased with the District Hearing Panel’s decision, an appeal can be made to the _____, then if that is unsatisfactory they can appeal to the _____
National Adjudicatory Panel; then to the SEC (then to the Federal Court)
Once a decision is final, the ______ decides the appropriate penatly
FINRA
The max fine for a MINOR penalty is _____
$2,500
