Section 3 Flashcards
If a fund uses its annual report as sales literature, it must be filed with FINRA, approved by a registered principal of the broker/dealer and accompanied by a prospectus.
If a fund uses its annual report as sales literature, it must be filed with FINRA, approved by a registered principal of the broker/dealer and accompanied by a prospectus.
Advertising is defined as any materials designed for use in a public medium to solicit business, such as radio, TV, newspapers, etc.
Advertising is defined as any materials designed for use in a public medium to solicit business, such as radio, TV, newspapers, etc.
Sales literature means any written communication generally available to the public, other than advertising, and must be accompanied by a prospectus.
Sales literature means any written communication generally available to the public, other than advertising, and must be accompanied by a prospectus.
R/Rs can take indications of interest under a preliminary prospectus, but may not take orders.
R/Rs can take indications of interest under a preliminary prospectus, but may not take orders.
Selling away is prohibited unless a R/R notifies his or her firm in writing.
Selling away is prohibited unless a R/R notifies his or her firm in writing.
The outside business activities of a R/R do not include acting in a passive role as a limited partner.
The outside business activities of a R/R do not include acting in a passive role as a limited partner.
Advertising on mutual funds must be filed within 10 days of first use with FINRA.
Advertising on mutual funds must be filed within 10 days of first use with FINRA.
Fund advertising and sales literature must contain the name of the FINRA member.
Fund advertising and sales literature must contain the name of the FINRA member.
The Statement of Additional Information (SAI) must be given (in addition to a prospectus) to any client upon request.
The Statement of Additional Information (SAI) must be given (in addition to a prospectus) to any client upon request.
A Statement of Additional Information must be given out upon the request of any client who buys a variable product, even if they elect to invest their monies in the ‘fixed account.’
A Statement of Additional Information must be given out upon the request of any client who buys a variable product, even if they elect to invest their monies in the ‘fixed account.’
A R/R who overhears inside information is not in violation as long as they don’t use the information themselves or pass it on to others who use it.
A R/R who overhears inside information is not in violation as long as they don’t use the information themselves or pass it on to others who use it.
An investment company advertisement may never contain an application to invest.
An investment company advertisement may never contain an application to invest.
Mutual fund sales literature containing quotations of current yield must also contain total return
information.
Mutual fund sales literature containing quotations of current yield must also contain total return
information.
R/Rs are permitted to state that they are required to disclose all material facts.
R/Rs are permitted to state that they are required to disclose all material facts.
When the SEC makes a new security registration effective, it means that no omissions were found in the registration statement. The SEC does NOT pass on the merits of a new security, approve the accuracy of the registration statement or approve its adequacy.
When the SEC makes a new security registration effective, it means that no omissions were found in the registration statement. The SEC does NOT pass on the merits of a new security, approve the accuracy of the registration statement or approve its adequacy.
Your Registered Principal must approve all orders (including wire orders).
Your Registered Principal must approve all orders (including wire orders).
When comparing mutual funds to bank CDs, a R/R may state that funds are viable alternatives to CDs,
but may NOT state that funds offer better performance than CDs.
When comparing mutual funds to bank CDs, a R/R may state that funds are viable alternatives to CDs,
but may NOT state that funds offer better performance than CDs.
R/Rs must give clients a prospectus when discussing the merits of a particular mutual fund, but NOT when discussing mutual funds or securities in general.
R/Rs must give clients a prospectus when discussing the merits of a particular mutual fund, but NOT when discussing mutual funds or securities in general.
A Mutual fund prospectus must include a fee table and the fund’s track record.
A Mutual fund prospectus must include a fee table and the fund’s track record.
Broker/dealers must keep records of all correspondence for three (3) years.
Broker/dealers must keep records of all correspondence for three (3) years.
In regards to a private placement, commissions, finders fees and reimbursed expenses are all considered to be compensation. However, registration fees are not, since private placements are exempt from registration under Regulation D.
In regards to a private placement, commissions, finders fees and reimbursed expenses are all considered to be compensation. However, registration fees are not, since private placements are exempt from registration under Regulation D.
Under FINRA rules, non-cash compensation may include gifts, travel expenses and educational expenses. Commissions are considered to be cash compensation.
Under FINRA rules, non-cash compensation may include gifts, travel expenses and educational expenses. Commissions are considered to be cash compensation.
R/Rs may share commissions with other R/Rs who are registered with the same firm.
R/Rs may share commissions with other R/Rs who are registered with the same firm.
Aunts and uncles are NOT considered to be immediate family unless they are dependent upon the R/R for
support.
Aunts and uncles are NOT considered to be immediate family unless they are dependent upon the R/R for
support.
Mutual fund rating services are not required to follow FINRA/SEC guidelines.
Mutual fund rating services are not required to follow FINRA/SEC guidelines.
Shares in an open-end mutual fund may never be sold without a prospectus, even if an investor has a history of buying them.
Shares in an open-end mutual fund may never be sold without a prospectus, even if an investor has a history of buying them.
Customer complaints must be kept on file by member firms for four years.
Customer complaints must be kept on file by member firms for four years.
The clients a registered representative develops while employed by a broker/dealer are the property of the
broker/dealer.
The clients a registered representative develops while employed by a broker/dealer are the property of the
broker/dealer.
Hypothetical illustrations using assumed rates of return may be used to demonstrate the way a variable life insurance policy operates.
Hypothetical illustrations using assumed rates of return may be used to demonstrate the way a variable life insurance policy operates.
Hypothetical illustrations may not be used to project or predict investment results.
Hypothetical illustrations may not be used to project or predict investment results.
A hypothetical illustration for variable life insurance may use any combination of assumed investment
returns up to and including a gross rate of 12%, provided that one of the returns is a 0% gross rate.
A hypothetical illustration for variable life insurance may use any combination of assumed investment
returns up to and including a gross rate of 12%, provided that one of the returns is a 0% gross rate.
Although the maximum assumed rate of 12% may be acceptable, members are urged to assure that the maximum rate illustrated is reasonable considering market conditions and the available investment options.
Although the maximum assumed rate of 12% may be acceptable, members are urged to assure that the maximum rate illustrated is reasonable considering market conditions and the available investment options.
The purpose of the required 0% rate of return is to demonstrate how a lack of growth in the underlying investment accounts may affect policy values and to reinforce the hypothetical nature of the illustration.
The purpose of the required 0% rate of return is to demonstrate how a lack of growth in the underlying investment accounts may affect policy values and to reinforce the hypothetical nature of the illustration.
The illustrations must reflect the maximum (guaranteed) mortality and expense charges associated with the policy for each assumed rate of return.
The illustrations must reflect the maximum (guaranteed) mortality and expense charges associated with the policy for each assumed rate of return.
Current charges may be illustrated in addition to the maximum charges.
Current charges may be illustrated in addition to the maximum charges.
Preceding any illustration there must be a prominent explanation that the purpose of the illustration is to show how the performance of the underlying investment accounts could affect the policy cash value and death benefit.
Preceding any illustration there must be a prominent explanation that the purpose of the illustration is to show how the performance of the underlying investment accounts could affect the policy cash value and death benefit.
The explanation must also state that the illustration is hypothetical and may not be used to project or predict investment results.
The explanation must also state that the illustration is hypothetical and may not be used to project or predict investment results.
Telemarketing rules do not apply to your current clients.
Telemarketing rules do not apply to your current clients.
If a person asks to be added to the firm’s do-not-call list they are on the list for an indefinite period of
time.
If a person asks to be added to the firm’s do-not-call list they are on the list for an indefinite period of
time.
Telemarketing rules prohibit cold calls be made outside the hours of 8am to 9pm of the times zone in which you are calling to.
Telemarketing rules prohibit cold calls be made outside the hours of 8am to 9pm of the times zone in which you are calling to.
The cold call rules do not apply to a person who has made an inquiry to the firm within the previous three
The cold call rules do not apply to a person who has made an inquiry to the firm within the previous three
The use of the FINRA logo is prohibited by anyone but FINRA.
The use of the FINRA logo is prohibited by anyone but FINRA.
