Review Flashcards
How are markups/markdowns determined in an active competitive market?
Highest Bid/Lowest Ask
Under state law, an offer of rescission made by a broker-dealer to a customer must be accepted or rejected by the customer within how many days?
30 days
A member firm must disclose in a research report if it has received, expects to receive, or intends to seek compensation for investment backing services from the subject company during what period?
12 months before and 3 months after publication
Unless customers provide written consent to the contrary, all trades for managed accounts must be done on an (agency/principal) basis.
Agency
Under Rule 103, when must application for acting as a passive market maker be made?
One business day before the restricted period begins.
SEC rules require that customer fail to delivers be closed out by buying in the position no later than how many days after the settlement date?
10 business days
How to you calculate Long Market Value (LMV) at maintenance?
Divide the debit balance by 0.75
Simplified arbitration is available only for claims of what dollar amount?
$50,000 or less
How frequently are long term capital gains distributed by investment companies?
Annually
What is a cross-guarantee?
When a customer agrees to use the money or securities in one account to carry the guaranteed account if it fails to meet margin calls, minimum equity requirements, etc.
Under Nasdaq trading rules, Market on Close orders cannot be cancelled after…?
3:50pm ET
If a securities broker-dealer registered with FINRA wishes to merge with another member, when must FINRA be notified?
at least 30 days prior to the closing date
When is a negative consent letter acceptable to effect a bulk transfer of variable annuities?
Only when a member firm is experiencing financial or operational difficulties or is no longer in business.
When must fidelity bonds be reviewed and renewed?
Annually, within 60 days of the bond’s expiration date.
Under Rule 101 of Reg M, syndicate members may only execute (solicited/unsolicited) orders during the restricted period?
Unsolicited
Code of Procedure decisions must be appealed within how many days?
25 days
SARs must be filed with FinCen for suspicious transactions aggregating what ammount?
$5,000 or more.
The issuer’s independent accountat issuing a (Qualified/Disclaimer) opinion is an acceptable grounds to delist from Nasdaq.
Disclaimer
Can customers purchase new issues on margin?
No
How are DPPS and unlisted REITS displayed on customer’s account statements?
As an estimated per-share value
How often are OSJs inspected?
Annually
Regarding TRACE reporting:
Markeups/Markdowns are (included/excluded)
Commissions are (included/excluded)
Markeups/Markdowns are included.
Commissions are excluded.
Investment advisers muse be federally registered if the amount of assets under management is what amount?
At least $110 million
Confirmations on DVP trades must be delivered no later than when?
T+1
Under the code of arbitration, monetary awards must be paid within how many days?
30 days
Regarding limited business member firms, who is allowed to purchase an equity IPO?
Employees of the limited business member firm, but not the firm itself.
When must SARs be filed?
Within 30 calendar days of suspicious activity.
Investment Companies only need to register if they have a capital of at least what amount?
$100,000
What action will Nasdaq take if a market maker receives a preferenced order and the firm is not at the inside market?
Nasdaq will return the order to the entering party.
Under Regulation M, securities with an ADTC of at least $100,000 and a public float value of at least $25 million are subject to a restricted period of how long?
One day (the business day before the effective date)
The managing underwriter must notify FINRA in writing wheter the restricted period is 1 or 5 days and state reasoning per Reg M.
Drafts of subordinated loan agreements should be filed with FINRA when?
at least 10 business days prior to the effective date of cash loans.
What is the minimum equity for prime brokerage accounts?
$500,000
Who determines if a circut breaker has been triggered?
The primary market or exchange
When must Registered Representatives and Principals recieve an annual compliance review?
Annually
Once a market maker’s bid or offer is decremented to zero, how long do they have to update their quote?
30 seconds
Confirmations must be sent or received no later than when?
The completion of the transaction.
Executing brokers in prime brokerage relationships have a minimum net capital of what amount?
$1 million
A buy-in may only be executed after giving the contra broker how much written notice of intent to buy-in?
Two business days
Securities in which a market maker is the sole market maker are (allowable/nonallowable) assets for capital computation purposes.
Nonallowable
There is no one else to purchase the inventory.
When must CTRs be filed?
Within 15 calendar days of currency receipt.
The minimum net capital for an established carrying firm is…
$250,000 or 1/15 of AI, whichever is greater
Under SOX, what is the statute of limitations for allegations of fraud in comnnection with the offering of securities?
Five Years
Purchase and sale of securities must be posted to the broker-dealer’s blotter no later than what date?
the business day following the trade date
For an additional issue offering where the subject security is quoted by the OTC Markets Group, what is the prospectus delivery requirement period?
40 days
Do “blind” help wanted ads need to be prefiled for established firms?
No
THey are subject to spot-checking.
Under Reg SHO, the market maker must close out the position by purchasing the security if a fail to deliver has been on the threshold securities list for how long?
More than 13 consecutive settlement days
Do blotters (records of original entry) reflect dividends and interest received?
No
In their first year, when must new members prefile all retail communications with FINRA?
10 business days before first use
A modification or cancellation of a member firm’s fidelity bond requires that notification be made to FINRA within how long?
10 business days
How often are nonsupervisory branch offices inspected?
Every three years
Which rule allows trades in unregistered securities between QIBs without concern for holding periods or volume restrictions?
Rule 144
For a Nasdaq-listed IPO, when must the syndicate manager notify Nasdaq as to what the POP (public offering price) will be?
by 6:45pm ET on the night before the issue is to be released for trading
If a Regulated Investment Company (RIC) accumulates greater than 5% interest in an issuer, it must file short Form 13G within how many days of the end of the calendar year in which it exceeded the threshold?
45 days
If discretion as to time or price is used, how is this indicated on the order ticket?
It is marked “not held”
How often must CAT reports be transmitted to FINRA?
Daily
Repurchase agreements are (allowed/not allowed) for exempt securities?
Allowed
Repurchase agreements are prohibited for nonexempt securities.
What is needed to approve the termination of 12b-1 fees of a mutual fund?
A majority vote of the outside directors.
If retail communication is already filed/cleared by a registered stock exchange, is filing with FINRA required?
No
Can securities in a discretionary account be rehypothicated?
No
A prospectus in use for more than 9 months cannot contain information older than how many months?
16 months
How are markups/markdowns determined in an inactive competitive market?
Contemporaneous sales/purchases
Are cross-guarantees allowed on regular or day-trading accounts?
Regular accounts only
They are prohibited on day trading accounts
How are markups/markdowns determined in a dominated and controlled market?
Contemporaneous cost.
Appeals of written determinations by Nasdaq regarding clearly erroneous trades must be made within how many minutes?
30 minutes
If the value of any single nonexempt securitiey exceeds what amount of tentative net capital, a firm must take an additional haircut on the amount by which the position exceeds the threshold?
10%
What is the statute of limitations for arbitration?
6 years
A member firm is exempt from the penny stock disclosure rules if its revenue from penny stock transactions is how much of its total revenue?
5% or less
Under SEC rules, how often must customers be notified of their free credit balances?
At least quarterly
Which class of mutual fund shares are eligible for breakpoints?
Class A Shares
What is the minimum net capital of a Prime Broker?
$1.5 Million
A report must be made to FINRA immediately whenever an associated person becomes a respondent in any securities- or commodities-related litigation settled for an amount greater than…?
$15,000
Under NMS Rule 606, how often must market makers report information on their routing of nondirected orders?
Quarterly
Under SOX, the officers signing the financial statements of a reporting company must certify that they have evaluated their internal controls within the previous how many days?
90 days
Bonds subject to a (partial/in-whole) call are subject to reclaimation.
Partial
Bonds subject to in-whole calls are never subject to reclaimation.
Appeals of written determinations by Nasdaq regarding clearly erroneous trades are made to what organization?
MORC
Market Operations Review Committee
When the number of shares in a stock dividend or stock split represent a 25% or more increase, when is the ex-date?
One business day after the payable/distribution date.
Who can act as principal in selling stock subject to Rule 144?
Market Makers in the subject security
They can purchase for their trading account inventory.
All disputes over what period must be addressed in a firms notice to FINRA and the SEC regarding termination of its independent accountant?
24 months prior to termination
Form 8K, used to report newsworthy events, must be filed with the SEC within how many days?
4 business days
Any concessions earned must be forfeited by the member if a customer redeems a variable annuity contract within how many days of acceptance by the insurance company?
7 days
After receiving a complaint from the Department of Enforcement, a respondent has how many days to file a response?
25 days
Unless an exception is available, carrying firms must perform a reserve computation how often?
Weekly
Research analysts are (prohibited/allowed) to participate in road shows relating to investment banking transactions.
Prohibited
Summary information on customer complaints and certain criminal/civil actions must be filed with FINRA when?
By the 15th day of the month following the calendar quarter in which the complaints/actions are made.
Are cross-guarantees allowed on regular or day-trading accounts?
Regular accounts only
They are prohibited on day trading accounts
Member firms are permitted no more than how many temporary subordinated loans per year?
Three
All SEC registered broker-dealers must file audited financial statements (audited FOCUS II or IIa) within how many days of the fiscal year-end?
60 days
Repurchase agreements are (allowed/not allowed) for exempt securities?
Allowed
Repurchase agreements are prohibited for nonexempt securities.
How long are shelf registrations valid for?
2 Years
3 Years for WKSIs
Clearing firms have a minimum net capital of what amount?
$250,000
When do individuals investing in master limited partnerships (MLPs) not recieve a Schedule K1 (Partners’ share of income, deductions, etc.)?
When they invest indirectly. (i.e. through mutual funds or other investment companies)
Trades not reported within 10 seconds of execution are considered late and must use which modifier?
.Z
A passive market maker’s bid is limited to…?
the highest current independent bid.
How often must carrying firms reduce to posession or controll all fully paid-for customer securities and excess margin securities?
Daily
12b-1 fees must be reviewed by the board of directors how frequently?
Quarterly
SEC Rule 15c3-3 is also known as…?
The Customer Protection Rule
Othen than bar or expulsion, when are sanctions imposed under the Code of Procedure effective?
On a date specified by the hearing officer, but no earlier than 30 days after the written decision is handed down.
How to you calculate Short Market Value (SMV) at maintenance?
Divide the credit balance by 1.3
CR / 1.3 = minimum maintenance.
Under Regulation A, how far in advance must an offering circular be provided to purchasers in advance of sales?
48 hours
What is the margin buying power for pattern day traders?
4x Maintenance Margin Excess
Regular buying power is 2x SMA
Regarding Regulation A, is general solicitation permitted on television?
Yes
Under Regulation M, securities with an ADTC of at least $100,000 and a public float value of at least $25 million are subject to a restricted period of how long?
One day (the business day before the effective date)
The managing underwriter must notify FINRA in writing wheter the restricted period is 1 or 5 days and state reasoning per Reg M.
Under the Cheap Stock Rule, what is the minimum margin required for stock trading under $5 per share?
100% Market Value or $2.50–whichever is greater.
Regarding penny stocks, established customers are exempt from the (suitability statement/disclosure) requirements.
Suitability Statement
What is the haircut on limited market (only one or two market makers) non-Nasdaq stock?
40%
Regarding the sale of unregistered or control stock, when must Form 144 be filed with the SEC?
Concurently with or before the sale.
Does the 5% policy apply to exempt securities?
No
Under FINRA rules, how often must discretionary accounts be reviewed?
Frequently
Investors can purchase securities on a secured website (Before/After) the investors have been qualified?
After
If a member has a reserve requirement, when must the deposit be made to the reserve account?
Within one hour of the bank opening on the second business day following computation.
When securities are discovered missing and criminal activity is suspected, when must a report be made to the SIC?
Within 1 business day of discovery.
How is the final payout for equity linked notes (ELNs) distributed?
In cash
SEC 17a-5 requires broker-dealers to prepare trial balances how frequently?
Monthly
A firm that has customer credits of more than $1 million is required to calculate its reserve requirement and make deposits into the special reserve account how often?
Weekly
Which act defines the determination of financial failure of a firm?
The Securities Investor Protection Act of 1970
Regarding margin accounts, what is included in SIPC coverage?
Only the equity in the account.
FINRA rules prohibit analysts and members of their households from investing in a company’s securities for how long before/after research report issuance?
30 days before and 5 days after issuance.
During the offering period, when is a syndicate member permitted to sell below the POP?
Only if released to do so by a manager. (The issue isn’t moving/selling)
SEC Rule 503 requires that issuers of unregistered securities file Form D (Notice of Sales Made) with the SEC within how many days of first sale?
15 days
Retail communications regarding DPPS must be (pre-/post-) filed?
post-filed, within 10 days of first use
Securities in which a market maker is the sole market maker are (allowable/nonallowable) assets for capital computation purposes.
Nonallowable
There is no one else to purchase the inventory.
