Sales and Supervision Flashcards
All FINRA applicants must have a least two officers qualified to become…
Registered as Principals (except sole proprietorships)
Firms that transact business in NONexempt securities must…
Register with FINRA & the SEC
If an associated person is denied registration, suspended, or expelled by another SRO, ____________ must be notified promptly. There is no requirement to notify the ___________.
A firm that has been expelled by any SRO and wants to become a member of FINRA will be…
- FINRA
- SEC
- statutorily denied membership to FINRA.
When must a firm notify FINRA that it has had a material change (i.e. plans to merge with another member firm)?
30 days prior to the merger
Small events that occur at member firms (such as branch openings and changes of address) require what type of notice?
notification within 30 days
A firms membership may be revoked by FINRA if fees are not paid within…
15 days written notice from FINRA
A LIMITED representative (series 6) may only sell products accompanied by a prospectus. For example, they may only sell closed-ended funds as a new issue, once the funds trade in the secondary market and are no longer accompanied by a prospects, one must have…
a series 7 or 62 and be considered a General Securities Representative.
Original signatures on the U4 are needed… When?
With initial submission and with any change to any of the DRPs (disclosure reporting pages).
When changes are made that require disclosure on your U4, the changes must be filed with the Central Registration Depository (CRD) when?
within 30 days
If an amendment to the U4 involves a statutory disqualification, suspension, violation, or fine in excess of $2,500 it must be reported…
within 10 business days.
A member will automatically be statutorily disqualified if they have been convicted of a securities misdemeanor or any felony within…
the last 10 years
From U5 must be filed within how many days of termination?
30
When an employee leaves a member firm, the firm has 30 days to file the employee’s U5 with FINRA and to provide a copy to the ex-employee. The employee’s new firm must get a copy of the U5 from whom?
FINRA or the new employee, NOT the old employer.
A newly hired employee must provide a copy of their U5 to the new employer… when?
within two business days of the request.
If a person is no longer associated with a firm, they may still be subject to a complaint filled against them as long as the complaint is filed…
W/in 2 years of the associated person leaving the firm.
When must the CE Firm Element be completed?
annually
When must the CE Regulatory element be competed?
Within 120 days of the second registration anniversary and every three years after.
FINRA Rule 4370: Business Continuity Plans must be provided to customers… (3)
upon account opening, posted on the website and emailed upon request.
FINRA Rule 4370: With the BCP the firm must designate how many emergency contacts?
If this info changes, it must be updated…
2
promptly
What are the industry’s SROs? (4)
Self Regulatory Organization:
- FINRA
- MSRB
- Exchanges
- Clearing Agencies
What 6 rules apply to an RR on military leave?
- Inactive Status
- 2 year clock paused
- CE Requirement Suspended
- May not be RR
- Can only receive commissions already on the books
- re-register within 90 day of return then clock starts again.
- If tape recording is needed at a branch office, the procedures and equipment must be in place…
- If the firm does not wish to be subject to the taping rule it has 30 days to…
within 60 days.
Fire people to get below thethreshold
What do the “Taping Rule” thresholds look like?
5-9 employees = 40% from disciplined firms
10-19 employees = 4 from disciplined firms
> 20 employees = 20% from disciplined firms
When must a firms CEO certify that the firm has a CCO and proper supervisory procedures in place?
Annually
Under FINRA rule 9522, the Dep. Of Member Regulation may decide (without a hearing) to allow a SD (stat. disc.) individual to remain associated by ________________. If the Dep. Of Member Regulation does not do this, the sponsoring firm has the right to take the matter to _______________.
- Becoming clerical only
2. NAC (National Adjudicatory Council) = a FINRA committee
The request to employ a SD (stat disc) person is made on form __________ and filed with _____________.
- Form MC400
2. Dep. Of Reg & Disc (RAD)
Any member party to a transaction with securities of another member firm must, upon written request, provide that member with a copy of its most recently prepared _________________.
Balance sheet.
Commodity Futures are not considered securities, and so are not regulated by FINRA, they are regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). What type of registration is needed to offer commodities to the public?
3 or 31
As the result of an SEC report which concluded that some NASDAQ market makers were manipulating the market, they created which series registration?
Series 55 - OTC equity trader
An individual who took on principal duties at a member firm has __________ days to take and pass a principal exam or be subject to FINRA sanctions.
90 days
All correspondence records must be retained for…
3 years
Any entity with 50 million or more in assets is considered….
An institutional investor.
Any customer that does not meet the definition of a “institutional investor” is considered a “retail investor.” All individuals are considered “retail” even ________________.
Accredited investor = retail investor
The use of “FINRA” in stationary must be ____________ than the firm name.
Smaller.
There is only one type of public communication a member firm can release to the public without disclosing its name…
A blind recruitment add (where the firm asks for resumes)
Regulation AC applies to…
Research of any type
Reg AC requires a firm to put disclosures on its research reports, this does not apply for ________________. If the ______________ is paid though, then that fact must be disclosed.
Independent 3 rd party
What is the safe harbor rule for the do not call list?
If the call to someone on the list was made in the first 31 days of receiving the list.
Repurchase agreements are ONLY permissible if…
- In writing
- Exempt security!!!
And - Time and price specified
If a bank has a radio advertisement it must include a disclosure unless…
It is less than 30 sec long.
Customer complaint rules must be preserved for…
4 years
While a member firm may not have a joint account with a client, a representative can so long as…
- Principal approved
2. Proceeds shared proportionally
A FINRA hearing panel has the right to issue what type of order?
Cease and desist
If a customer requests a copy of his arbitration agreement, the firm has how many days to comply?
10 business days
A customer has the right to request a written explanation of an arbitration panels decision as long as….
The request is made before the panel holds it’s first meeting and all involved parties have submitted a joint request.
Once mediation begins, either party may ____________ without the consent of the mediator or the other party.
Withdraw
FINRA rule 3310 requires that both ___________ and ___________ must occur annually regarding the firms anti money laundering program.
- Senior management approval
2. Reviewed by independent examiner
The statute of limitation for submitting a claim under the arbitration code is…
6 years
Retail communications relating to ______________, ______________, and ______________ must be filed with FINRA within 10 days of first use.
Retail communication relating to ______________ and _______________ must be filed with FINRA at least 10 days prior to first use.
Investment companies, DPPs, & CMOs = w/in 10 days of first use
Options & futures = 10 days prior
Under normal circumstances when a person deals exclusively outside the US there is no need to register with FINRA, however,if a foreign person is associated with a a US firm, they must register with FINRA even though they are not subject to…
A qualifying exam
Form U4 requires a 5 year _____________ history and a 10 year ____________ history.
5 yr residency history
10 yr employment history (principal must verify 3)
MSRB form G37 is a political contributions disclosure filed quarterly with the MSRBas they relate to municipal securities business. This rule specifically applies to…
The 2 year prohibition on Negotiated offerings and financial advisory work if a political contribution is made.
Note: $250 per election permitted if the MFP is eligible to vote.
Customer complaint logs must be filled with FINRA _______________ unless…
W/in 15 days of tHe quarter end UNLESS… the complaint involves allegations of theft or forgery, then they must be filed within 10 days
A Member firm can only grant discounts, concessions, or other allowances to other FINRA members. WHAT ISTHE EXCEPTION TO THIS RULE?
Exception is made for foreign non-members ineligible for membership
Under the code of procedure, If a member wishes to appeal a hearing decision with the NAC, how many days do they have to do so?
25 days
*** remember, under the Code of Arbitration it is 45 days.
Under the code of procedure, when a person receives a complaint from the department of enforcement the respondent has ____________ days to file a response.
After the response is received, a pre-hearing conference must be held _____________.
25
Within 21 days.
FINRA will charge its members both fees and assessments. What are the individually based on?
Fees = number of reps, principals, and branch offices
Assessments = revenue from securities transactions
Under the Code of Arbitration, a respondent must have ___________ days to respond to a claim against them.
45 days
*** remember under code of procedure it is 25 days
What does FINRA regulate?
What type of transactions are outside of its jurisdiction?
OTC transactions in non-exempt securities.
FINRA does not regulate exempt securities, or listed securities on an exchange.
If a person is suspended, they may not stay on the premiss or work for the firm in any way, he can however…
Receive moneys earned prior to his termination
Penalties under the code of procedure may result in…
Censure, expulsion, suspension, fines
Who maintains the registration history of associated persons, and runs the Broker Check program?
The Central Registration Depository (CRD)
What type of transaction requires written notice to the member and then written permission to proceed from the member?
Private securities transaction. (Passive investments don’t count)
When communicating with the public, any investment analysis tools must be…
Filed with FINRA w/in 10 days of first use.
Research analysts may not ___________ for 30 days prior and 5 days after the release of a report.
Research analysts can never…
Invest.
Invest against there recommendations.
Analysts must disclose any investment banking fees received from an issuer in a report…
12 mo prior and 3 mo after the report is released
Research analysts have to submit its annual report to FINRA by April 1 of each year to attest to…
It’s compliance
What is the maximum fine for a Minor Rule Violation (MRV)?
$2,500
Broker Check will not release info on monetary sanctions under…
$15,000
When there is an Arbitration over $100,000 b/w member firms, there will be _______________ arbitrators.
When there is an Arbitration over $100,000 b/w a member firm and a customer, there will be _______________ arbitrators.
Member firms = 3 non-public
Member Firm & Customer = 2 public, 1 non-public
- What is an IPR?
- Is principal approval required?
- Is FINRA filing required?
- Independently Prepared Reprint
- Prior principal approval required
- FINRA filing not necessary
The code of procedure was created to deal with violations of…
- FINRA
- SEC
- MSRB
A Suspicious Activity Report (SAR) must be filed with the Financial Crimes Enforcement Network (FinCEN) for suspicious transactions aggregating at least $__________ or more within ___________ days.
$5,000
30 days
A pattern of currency deposits designed to avoid currency reporting requirements is called…
Structuring
A member firm has offices in all of the branches of a bank. When the member opens a customer account, how must the rep disclose that the money’s sold are not insured by the FDIC?
FINRA rules require both oral and written disclosure of the risks. In addition, members must make a reasonable effort to obtain written acknowledgment
Under the Bank Secrecy Act, a currency/cash deposits of $____________ in a single day must be reported on Form 112.
Under the US Patriot Act, any suspicious event, transaction, or series of transactions that aggregate at least $___________ must be reported to FinCEN as a SAR.
Under the US Patriot Act, records on wire transfers of $____________ or more must be retained.
$10,000
$5,000
$3,000
The ____________ must certify annually that the firm has processes in place to monitor its supervisory procedures.
CEO (not CCO)
