review exam 2 Flashcards
The following products are eligible for portfolio margining.
- All margin equity securities (Nasdaq- and NYSE-listed securities)
- Listed options
- Security futures products
- Unlisted derivatives
- Warrants
- Index warrants and related instruments
Employees of broker-dealers do not need approval to open a securities account for securities that are
limited to transactions involving redeemable investment company securities (mutual fund shares), unit investment trusts, variable contracts, or 529 plans
Short Interest REporting REquirement
FINRA members must maintain a record of total short positions in any security listed on a national securities exchange (e.g., NYSE and Nasdaq) and OTC equity securities for both customer and proprietary accounts.
This information must be filed with FINRA twice each month and would be reported by the close of business on the second day after the calculation.
generic advertising is
• Explanatory information relating to securities of investment companies
• Explanation of investment company investment objectives
• Offers, descriptions, and explanation of various products and services that do not constitute a security subject to registration
• An invitation to inquire for further information
Such communication contains the name and address of a registered broker or dealer or other person sponsoring the communication
On an annual basis, a corporation will be considered a Real Estate Investment Trust (REIT) if it meets the following test.
At least 95% of its gross income must be derived from real-estate-related activities (such as rental income), interest received on mortgages, or dividends and interest. Of that 95%, at least 75% must be derived solely from real-estate-related activities. This means no more than 5% of a REIT’s income may be derived from non-real estate business
clients of an introducing firm are considered clients of the
Whether for purposes of the SEC Net Capital Rules and the Securities Investor Protection Act, all clients are considered to be customers of the clearing member (not the introducing firm).
whats not in the clearing firm agreement commission disclosure
How commissions and other types of compensation are split between the two firms are contractual business arrangements and are not required to be included in clearing arrangements
According to SRO rules, predispute arbitration clauses contained in customer account forms must be highlighted and must contain certain information, including:
• All parties are giving up the right to sue in court, and arbitration awards are generally final and binding.
• Arbitrators do not need to explain the decisions for their award.
• Within 30 days of signing the agreement, the customer must be sent a copy and, after receiving a copy, the customer must acknowledge receipt.
Predispute arbitration clauses may not limit the ability to make an award or limit the amount of the award.
Life time records that must be maintained by a broker-dealer include
tock certificate books, the corporate charter and minutes books, and partnership articles
Some broker-dealers may elect to be governed by an alternative net capital requirement.
This requirement is based on the aggregate debit items and requires net capital of $250,000 or 2% of the aggregate debit items, whichever is greater.
This requirement is based on the aggregate debit items and requires net capital of $250,000 or 2% of the aggregate debit items, whichever is greater.
Rule 17a-11 requires a broker-dealer to file notice if certain events occur. If its books and records requirement under Rule 17a-3 is not current, the notice must be filed immediately. Within 48 hours, it must file a notice stating what the firm has done to correct the situation.
Under SEC Rule 606,
a BD must report nondirected order flow only
The board of directors wants to take a public company private.
what form is filed
SEC Rule 13e-3 applies to going private, a transaction by issuers of publicly traded securities. The issuer is required to file a Schedule 13E-3 with the SEC
Regulation A+ offering dollar amounts
A Regulation A+ offering is a small-dollar offering of no more than $50,000,000 over a 12-month period. However, the maximum amount that may be sold on behalf of existing shareholders is $15,000,000.
Regulation M Restricted Period
The restricted period under Regulation M generally begins the later of five business days prior to pricing or whenever the broker-dealer becomes a participant. It ends when the broker-dealer’s participation is over. However, if the subject security has an average daily trading volume (ADTV) of at least $1,000,000 and the issuer’s public float is $150 million or more, there is no restricted period.
