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Series 6 > S6 Regulatory Fundamentals > Flashcards

S6 Regulatory Fundamentals Flashcards

1
Q

Fingerprint Records

A

Fingerprint records must be kept for at least 3 years after termination of employment

PG 1

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2
Q

Accredited Investor

A
  • Individual NW: 1 million or more
  • Institutional: banks, ins companies, large pension plans
  • Trusts or tax exempt organizations: 5M or more
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3
Q

SEC Reg D

A

Private Placements

  • Exempt from SEC registration
  • Can be sold to unlimited Accredited Investors
  • No more than 35 non-accredited investors

PROHIBITS ANY ADVERTISING

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4
Q

Under regulation D there are no limits regarding the number of accredited investors there can be no more then ________ non accredited investors

A

35

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5
Q

SIPC

A
  • covers insolvency by a B/D

- covers up to 500,000 per separate customer of which 250,000 maybe cash

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6
Q

SIPC does NOT cover _____?

A

Mutual Funds Accounts

*Mutual fund SHARES that are held in a brokerage acct ARE covered

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7
Q

SIPC

Members shall provide all customers with the same information, in writing at least _____

A

Annually

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8
Q

Continuing Education

-Firm Element-

A

Annual basis

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9
Q

Fingerprints

A

FINRA requires separate registration and fingerprinting of firm principlals and their registered representatives

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10
Q

Continuing Education

-Regulatory Element-

A

Within 120 days of your 2nd registration anniversary date & every 3 years thereafter

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11
Q

Customer Account Information

A
  • customers name & residence address
  • whether customer is of legal age
  • names of the associated persons if any responsible for the account and if multiple individuals are assigned responsibility for the account, a record indicating the scope of their responsibilities with respect to the account
  • signature of the partner, officer or manager denoting that the account has been accepted in accordance with the members policies and procedures for acceptance of accounts

REP SIGNATURE NOT NEEDED
SIGNATURE OF MANAGER NEEDED

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12
Q

Customer Complaints

A
  • firms are required to report statistical & summary WRITTEN customer complaint info to FINRA QUARTERLY
  • must be provided to FINRA by the 15th day of each month following the calendar quarter in which the complaints were received by the member
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13
Q

Member firms shall preserve a record of any customer account information that is subsequently updates for at least _______ years after the date that such information is updated

A

6

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14
Q

Customer Complaints

-FINRA Rules require a customer complaints, as well as the action taken, to be kept for _____ years by the member firm

A

4

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15
Q

Customer Complaints
- member firms must notify FINRA when they receive a customer complaint alleging THEFT or MISAPPROPRIATION of funds or securities _______

A

Promptly (30 calendar days)

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16
Q

Armed Forces

A
  1. Inactive status
  2. Does NOT need to be re-registered
  3. Eligible to receive commission
  4. Do NOT need to pay dues or assessments or a “reactive” fee
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17
Q

Any person who’s registration as a representative or principal has been terminated for a period of ______ years or more should be required to pass a qualification exam for representatives appropriate to a category of Registration required by law

A

2

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18
Q

Do you register a broker-dealer form _____ is filed

A

BD

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19
Q

To terminate the registration of an associate a person, form ____ is filed

A

U5

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20
Q

To register as an associate a person, form ____ is filed

A

U4

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21
Q

To terminate the registration of a broker-dealer, form _____ is filed

A

BDW

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22
Q

Felony on U4

A

Past 10 yrs (regardless if dropped)

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23
Q

Misdemeanors on U4

A

Past 10 yrs ONLY if related to securities, money, or dishonesty must be disclosed

24
Q

Application for Registration (Form U4, Form BD, Form ADV)

(Every application for registration filed with the corp shall be kept current at all times by amendments files electronically. Such amendment to the app must be filed not later than _______ after learning of the facts)

A
  • 30 days

PG 3

25
Q

Voluntary Termination

-Form U5 must be amended with the persons name and/or address changes for an additional _____ after initial filing

A

2

26
Q

Statutory Disqualification

(The SEC can delay or deny the application of a B/D if the application is intentionally incorrect or if any person associated with the B/D has _______)

A

(Means you cannot be affiliated with their broker-dealer in any capacity)

  1. Has been convicted within 10 yrs of ANY securities related crime
  2. Has willfully violated the provisions of any Federal securities act
  3. Has been expelled or suspended
    from any SRO

PG 2

27
Q

Broker Check

A

FINRA maintains a system entitled BrokerCheck that allows the public to access information regarding registered persons, including currently registered persons as well as those individuals who have been associated with the member within the preceding 10 years

  • includes the qualification examinations that were passed and the date they were passed
  • does not release all information found on an individual form U5, including the reason for termination
28
Q

What’s NOT a security?

A
  • Keogh
  • IRA
  • Common features
  • Fixes annuities
  • insurance (unless variable)
29
Q

Exempt Securities

A
  1. Govt
  2. Muni Securities
  3. Religious
  4. Pension
  5. Public Utilities
  6. Insurance (unless variable)
  7. Financial (unless bank holding)
  8. Commercial paper (280 days/9m)
  9. Federal Covered (exchange, NASDAQ)
30
Q

Investment Advisor

A

Any person who for compensation, engages in the business of advising others, either directly through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who , for compensation and as a part of a regular business, issues or promulgates analysis reports concerning securities

31
Q

Who is not an IA?

A
  • bank
  • IAR
  • LATE
32
Q

U5

A
  • voluntary termination
  • must be filed within 30 days
  • must be amended with a persons name and/or address changes for an additional 2 years after initial filing
  • terminated individuals must be given a copy of the form U5 being filed
  • termination of registration WILL NOT take effect of a complaint or action is pending against a person
  • a member that does not submit such notification & provide a copy to the person whose association has been terminated, within the time period prescribed, shall be assessed a late filing fee
33
Q

Information related to statutory disqualification shall be electronically added to a person’s registration within ______ days

A

10

34
Q

The SEC will grant or deny or broker-dealers registration, as well as an investment advisers registration, within ______ days of filing form BD or ADV

A

45

35
Q

The SEC will inspect a B/D within ____ months of granting the firms initial registration to determine that the firm is in compliance with all federal securities rules and laws.

A

6

36
Q

Taping Rule

A

Requires a firm to establish, maintain and enforce special written procedures for supervising the telemarketing activities of all of its registered persons

37
Q

A firm that becomes subject to the Taping Rule has ____ days to establish and implement the rule

A

60

38
Q

Taping Rule

A
  • Tape recordings made by firms subject to the Taping Rule must be retained by the firm for no less than 3 years from the date the tape was created (2 yrs readily accessible)
  • Tape recordings must be categorized by Registered Person & Date
39
Q

Firms subject to the Taping Rule must submit by the _____ day of the month following the end of each calendar _____ a report to FINRA on the members supervision of the telemarketing activities of its registered persons

A

30

quarterly

40
Q

Tombstone

A
  • advertisement that announces a new issue

- DOES NOT have to be accompanied by a prospectus

41
Q

SIPC

(Investment companies are ____ required to be members of SIPC

A

NOT

42
Q

SIPC

Broker/Dealers are ____ required to be members of SIPC

A

ARE

43
Q

Networking Arrangement Between Members & Financial Institutions

(at or prior to the time that a customer securities brokerage account is opened the B/D shall disclose ORALLY & in WRITING that the securities products or sold in a transaction with the B/D)

A
  • are NOT insured by the FDIC
  • are not deposits or other obligations of the finance or institution and are not guaranteed by the finance an institution
  • are subject to investment risks including possible loss of the principal invested

THE B/D MUST MAKR REASONABLE EFFORTS TO OBTAIN FROM EACH CUST A WRITTEN ACKNOWLEDGEMENT OF THE ABOVE DISCLOSURES DURING THE ACCT OPENING PROCESS

44
Q

U4
(Every app for registration filed with the Corp shall be kept current at all times by amendments filed electronically. Such amendment to the app must be filed not later than _______ days after learning of the facts

A

30

45
Q

Manner of Registration of B/D

(The Commission, by order, shall censure, place limitations on the activities, functions, or operations of suspend for a period __________ or revoke the registration of any B/D if it finds on the record after notice and opportunity for hearing that such censure placing of limitations suspensions or revocation is in the public interest and that such B/D whether prior or subsequent to becoming such or any person associated with such B/D wherever prior or subsequent to becoming so associated)

A

-not exceeding 12 months

PG 13

46
Q

Upon filing an electric Form U4 on behalf of a person applying for registration, a member shall promptly submit fingerprint information for that person. FINRA may make a registration effective pending receipt of the fingerprint information. If a member fails to submit the fingerprint information within _______ after FINRA receives the electronic form U4, the persons registration shall be deemed inactive

A

30 days

47
Q

Manner of Registration of B/D
(Within _______ days of the date of the filing of such application (or within such longer period as to which the applicant consents), the Commission shall:

  • by order grant registration
  • institute proceedings to determine whether registration should be denied

PG 13

A

45 days

48
Q

Networking Arrangement Between Members & Financial Institutions

A
  • the B/D name shall be clearly displayed in the area in which the B/D conducts its services
49
Q

At or prior to the time that a customers securities brokerage acct is opened by a B/D on the premises of a financial institution where retail deposits are taken, the B/D shall disclose ______ & _______

A
  • orally & in writing
  • are NOT insured by FDIC
  • are not deposits or other obligations of of the financial institution & are NOT guaranteed by the financial institution
  • subject to investment risks
  • the B/D must make reasonable efforts to obtain from each customer a written acknowledgement of the above disclosures during the acct opening process
50
Q

Taping Rule

(for the first time may reduce its staffing levels to fall below the threshold levels within _______ after receiving notice from the NASD

A

30 days

51
Q

Customer Account Information

(For each acct (other than institutional) each member shall also make reasonable efforts to obtain, prior to the transaction)

A
  • customer tax ID or SS#
  • occupation of customer & name & address of employer
  • whether customer is an associated person of another member
52
Q

Person Associated with a Member means ________

A
  • a natural person who is registered

PG 2

53
Q

Application for Registration (Form U4, Form BD, Form ADV)

(Every application for registration filed with the corp shall be kept current at all times by amendments files electronically. If an amendment involves a STATUTORY DISQUALIFICATION the amendment must be filed ______ after such disqualification occurs)

A

-10 days

PG 3

54
Q

Notification by Member to Corp & Associated Person of Termination

(Following the termination of the association w/ a member of a person who is registered with it, such member shall, not later than ______ after such termination, give notice of the term of such association to FINRA via electronic process (form U5) & @ the same time provide to the person whose association & provide a copy to the person whose association has been terminated a copy for the form U5 filing

A

-30 days

PG 3

55
Q

Notification by Member to Corp & Associated Person of Termination

(Termination of registration of such person associated with a member shall _________ effect so long as _________ or ________ under the rules of the corp is pending.

A
  • not take
  • complaint
  • action

PG 3

Series 6 (5 decks)

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