Series 10 Cards Flashcards

Question

Publically Announced Intent to Acquire Company Target Company Statement on position 1. Timeline to make statement 2. Types Allowed

Answer 1

1. 10 BD of announcement

Answer 2

issuer buys back its own stock in open market

Answer 3

DMM or OTC Market maker

Answer 4

1. 25% avg over 4-weeks 2. Block purchases outside normal flow

Answer 5

Neither the... - 1st Transaction of day - last 30 min of trading

Answer 6

No higher than highest independent Bid or last sale (whichever higher)

Answer 7

1. 1 year 2. No more than 3 months ownership 3. 3 months

Answer 8

1. Hedge Funds 2. Hedge Funds 3. Eligible subject to de minimus rule & Carve out Procedures

Answer 9

1. 10% 2. no more than 1,000 to restricted persons 3. No more than 700 to restricted persons

Answer 10

1. Allocating hot IPO to firm in exchange for future business 2. - Firm Current Client - Company where Firm Received compensation in last 12 months - Company where firm knows it will retain business in next 3 months

Answer 11

1. Selling hot IPO within 30 days of purchase 2. Penalty for selling before 30 days

Answer 12

Restricted person's interest in account does not exceed 10%

Answer 13

ADRs Additional Offerings Debt Securities

Answer 14

1. Writing to Firm Written approval from Firm 2. When family or banks

Answer 15

3 years after the arrangement terminated or Rep leaves the firm

Answer 16

1. Min Increment is $0.01 2. Min Increment can be sub penny

Answer 17

1. Those trading on Nat'l & Regional Exchanges 2. Pink Sheet Securities

Answer 18

1. Market centers used and firm's nature of relationship with center 2. Quarterly to the public

Answer 19

1. Directed - Customer Specifies Market Center NonDirected - Firm Specifies Market Center 2. NonDirected only

Answer 20

1. For prior 6 months 2. Annually

Answer 21

< 500 Orders per month OR <5% of NonDirected Order Flow

Answer 22

1. if a revised quote is entered prior to order received 2. If MM is executing a trade during order time and at completion enters a revised quote

Answer 23

1. if used to keep MM quote away from inside market 2. when used to ensure bid/ask price maintained the same in another trading system

Answer 24

1. Before Order 2. As of trade Date (NOT SETTLEMENT DATE) 3. Still considered long

Answer 25

1. Rounded down to nearest penny 2. Rounded up to nearest Penny 3. 10 Seconds

Answer 26

1. 7 BDs 2. Before or WITH Solicitation 3. If redeemed within 7 days of sale by customer

Answer 27

1. 36 months 2. Documented as to nature & response from customer

Answer 28

1. At time required 2. if Market Maker if Firm owns 1% or more 3. Not required

Answer 29

Ordinary Income

Answer 30

1. BEFORE Purchase 2. Written Ack 3. Customer must sign

Answer 31

1. BOTH Member and Registered Rep 2. Both Bid & Ask

Answer 32

1. Effected non-penny stock trans or 1 year before penny stock trade 2. 3 different stocks & 3 different days 3. May solicit without if established customer

Answer 33

5% or less in Penny Stock Business

Answer 34

1. Exempt 2. Not Exempt for Disclosure

Answer 35

Under $5 OTC Pink Sheet OR OTC Bulletin Board Stocks

Answer 36

$5M in Investments

Answer 37

At least 3 months

Answer 38

Blind Pool - May disclose industry Blank Check - no identity of investment intent

Answer 39

Rep moves customer between funds for no good reason

Answer 40

1. Full Only 2. Fractional Allowed

Answer 41

at least $100,000

Answer 42

1. Issue bonds, Preferred Stock, Loans from Banks 2. Short Term Only

Answer 43

1. $110M 2. <$100M 3. $90M

Answer 44

1. Face Amount Certificate Companies 2. UITs 3. Management Companies (Mutual Funds)

Answer 45

1. $1M 2. $2.1M 3. S&P 500

Answer 46

within 2 BD or trade date OR 1 BD of receipt WHICHEVER IS LATER

Answer 47

Class A Shares so they can get breakpoints Breakpoints not available in Class B shares

Answer 48

No more than 60% of the board

Answer 49

1. Nominal (same regardless of size) 2. Certain Professionals allowed (lawyers, Accountants, ect.)

Answer 50

1. 80% (ie growth fund) 2. At least 25% in that sector

Answer 51

1. 9 months 2. 16 months 3. Mutual FUnd Allowed to Advertise without the FULL DISCLOSURE in the Prospectus

Answer 52

1. Remains the Same 2. Limited (Portfolio is fixed & not traded).

Answer 53

1. Fixed - Not traded Participating - Portfolio of different Mutual Funds 2. Operate as Participating Unit Trusts

Answer 54

1. 2 years 2. 60 days written notice 3. Termination

Answer 55

1. Fund's Chief Compliance Officer (CCO) 2. Annually

Answer 56

1. Closed End - to open market Open End- to Management Company only

Answer 57

When Contract between member & principal exists AND Bought to fill customer order already received

Answer 58

0.75% of the average annual net assets of the Investment Company

Answer 59

AKA Quarterly Trailers Follow initial Sale and pays Rep %

Answer 60

OUTSIDE DIRECTOR Majority Vote

Answer 61

1. Quarterly 2. BOD

Answer 62

Investment Advisory Fees

Answer 63

General Securities Principal (Series 24) OR Investment Company Principal (Series 26)

Answer 64

Series 53 Series 51 Series 24

Answer 65

must disclose ALL recommendations of past 12 months in similar securities Cannot Cherry pick

Answer 66

Acceptable if Payment disclosure Made

Answer 67

Public Appearance

Answer 68

1. Pre-use Approval by a principal 2. No FINRA Filing Required

Answer 69

1. Retail 2. Correspondence 3. Institutional

Answer 70

1. Firm must have written procedures 2. Considered Communications

Answer 71

1. Content vs device 2. Prohibited 3. Requires Principal Approval

Answer 72

Still considered Retail Investors

Answer 73

8AM to 9PM

Answer 74

Phone, Fax or Email

Answer 75

last 18 months

Answer 76

last 3 months

Answer 77

within 31 days of receipt of new list

Answer 78

Acquaintances Rep must attest in writing to BOM to genuine personal relationship

Answer 79

Doesn't recommend a specific fund or security

Answer 80

1. w/in 3 BD of Initial Contact 2. 3 months after employment start date

Answer 81

1. Not Required 2. Can be email with hyperlink 3. Not Required

Answer 82

1. 1% or more 2. Close of Previous Month

Answer 83

1. within last 12 months 2. in next 3 months

Answer 84

1. Quiet period for members who participated in underwriting 2. 10 days 3. 3 days

Answer 85

Significant News Event OR Company is actively traded security by Reg M, Rule 139 already

Answer 86

last 12 months

Answer 87

Only comparable companies over the last 12 months

Answer 88

1. 30 days before 2. 5 days after

Answer 89

Requires final report with a rating

Answer 90

1. No Approval Required 2. Must be supervised

Answer 91

1. Prior Principal Approval 2. Prior Principal Approval 3. No Prior Approval, Must be supervised

Answer 92

1. Retail Communication 2. Require Prior Approval

Answer 93

Allowed with Approval and record maintained

Answer 94

No Filing Required

Answer 95

10 days after 1st use for Investment Company DPP CMO

Answer 96

10 days before 1st use for Options Securities Futures

Answer 97

1. Paid $100 or more 2. Ad Must state Qualifications 3. Prohibited

Answer 98

must be without condition or obligation

Answer 99

Prohibited

Answer 100

Must be reasonable and Realistic

Answer 101

1. Series 53 2. 2 (unless <11) 3. Supervise Municipal Securities

Answer 102

1. Series 51 or 53 2. 2 (unless <11) 3. Supervise Municipal FUND Activities

Answer 103

1. Series 9/10 2. 0 3. Supervise SALES Related Activity (may not approve advertising)

Answer 104

1. Series 52 or 7 2. Purchase, Sell, Underwrite Municipal Securities

Answer 105

Compliance Officer Required for Chief Compliance Offices

Answer 106

1. Series 27 2. 1 per firm 3. Supervise Financial Reporting and Clearance

Answer 107

Insurance Agents Commodities Futures Reps Traders of Commercial Paper US Treasury Traders

Answer 108

FINRA Registration

Answer 109

1. 90 days after 2. None 3. Picks up where they left off after toll expires

Answer 110

1. 30 days 2. Suspension or revocation after giving 15 days written notice

Answer 111

1. FINRA & SEC 2. Comptroller of Currency 3. Federal Reserve Board 4. FDIC

Answer 112

within 25 days of service of decision

Answer 113

1. Dept of Enforcement 2. National Adjudicatory Council (NAC) 3. Board of Governors 4. SEC

Answer 114

General Supervisory Functions Can Approve Communications including Municipal

Answer 115

1. <11 Associated Persons 2. Firm belongs to another Securities Association such as FINRA

Answer 116

1. General Securities Principal 2. 10 years 3. 5 years

Answer 117

1. 20 days after written notification 2. Suspension

Answer 118

10 Business Days

Answer 119

1. Trade Practice Violation 2. 25 days to answer

Answer 120

1. 45 days 2. Barred from providing any evidence

Answer 121

1. $50k or less 2. 30 days 3. 6 Years

Answer 122

17 Business Days after end or each QUARTER

Answer 123

Promptly NLT 30 days

Answer 124

1. 10 days 2. 30 days

Answer 125

15 days after end of each QTR

Answer 126

Exempt Securities OR Foreign Underwritings

Answer 127

1. 30 days 2. 2 business days

Answer 128

Visit US Customer Effect Trades through US Firm May not ACCEPT ORDERS from a US Customer

Answer 129

1. $15,000 2. $25,000

Answer 130

Investment Company Products

Answer 131

every 3 years

Answer 132

No Inspection Required

Answer 133

every 3 years

Answer 134

As often as necessary

Answer 135

Every 4 years

Answer 136

1. Not Required 2. 3 years

Answer 137

1. 5-9 RR with 40% or more 2. 10 - 19 RR with 4 or More 3. 20+ RR with 20% or more

Answer 138

within the last 3 years

Answer 139

1. 30 2. 60

Answer 140

1. 50% of contribution 1. 0% (not covered by rule)

Answer 141

1. Quarterly Jan 31, Apr 30, Jul 31, Oct 31 2. 6 Years

Answer 142

effective date of donation even if prior to MFP role

Answer 143

1. <30 DAYS / year 2. < 25 TRANSACTIONs / year

Answer 144

1. within 4 months of contribution 2. Not exceed $250 3. Returned within 60 days of discovery 4. 2 per year

Answer 145

1. 2 year timeout period 2. $350 3. $150

Answer 146

1. only between Member Firms 2. Foreign NonMember not Eligible for FINRA Membership

Answer 147

1. 30 days 2. also covered

Answer 148

1. Offshore Account Restriction 2. Requires Reg T Compliance for $ borrowed from outside US to buy US securities 3. Must clear before funds free for purchase

Answer 149

PDT - 4 Times MAINT Margin Excess RC - 2 Times SMA

Answer 150

1. Allowed to use in his account to cover other Margin Calls 2. Not allowed to use other accounts to cover his margin Calls

Answer 151

Customer Trades routed to Executing Brokers A, B or C routed to Prime Broker

Answer 152

Provides customer with reports and custody

Answer 153

1. Permits Fiduciary to buy securities a prudent expert would buy 2. Non-Speculative, Low to mod risk, in line with Modern Portfolio Principles

Answer 154

Passport Number or Alien Registration Card

Answer 155

1. Investment Banking Personnel Other Analysts 2. Annually

Answer 156

Muni Funds Variable Annuities Mutual Funds UITs

Answer 157

EMMA Electronic Municipal Market Access

Answer 158

Transfer Agent

Answer 159

Death or mental incompetence

Answer 160

Price and Time Day orders

Answer 161

1. 3 months 2. Safety or Security

Answer 162

1. Firm offers to buy back security 2. Higher cost or Market Value 3. Interest Paid from date of purchase to repurchase date 4. 30 days

Answer 163

Requires BD to ensure transactions are not excessive even if they are suitable individually Suitability in the aggregate

Answer 164

1. Municipals Principal (Series 53) Municipal Sales Principal (Series 10) 2. MSRB - 6 years FINRA - 4 Years

Answer 165

$1,000 or $5,000

Answer 166

$1,000 or $100,000

Answer 167

1. Never Allowed 2. Only Round Lots

Answer 168

Delivery of Called Bonds is Good

Answer 169

Seller must deliver only non-called bonds

Answer 170

Seller must ID to Buyer that bond is called

Answer 171

Bond is good deliver - buyer must accept

Answer 172

Only if on Fed Reserves Marginable Securities List

Answer 173

if > 9 months

Answer 174

1. >9Months 2. 75% of Premium

Answer 175

Before Opening Account In Writing or Electronically

Answer 176

Institutional does not require disclosure Non-institutional does

Answer 177

1. Pool of multiple municipal funds issued by State 2. Not guaranteed

Answer 178

Proper Conduct Rule Must deal fairly with all persons

Answer 179

Exempt Securities

Answer 180

Municipalities are not subject to regulation by MSRB

Answer 181

Used by regulators to report Disciplinary Action and Final Arbitration Awards

Answer 182

1. Conduct all business outside the US 2. Must Register with FINRA 3. Exempt from Exams

Answer 183

Securities Trader Direct Access to the Marketplace

Answer 184

1. w/in 120 days of 2nd anniversary 2. Every 3 years after

Answer 185

May supervise activities May NOT Approve Advertising

Answer 186

1. Alternative Min Tax 2. Municipality

Answer 187

6, 7, or 52

Answer 188

Placement Layering Integration

Answer 189

1. $500,000 per client 2. $250,000 cash

Answer 190

1. Written Notification 2. May reject or restrict 3. Written Approval by Firm Not Required

Answer 191

No earlier than 30 days unless permanent cease & desist order

Answer 192

NLT 30 days after filing U4

Answer 193

2 years (includes nonregistered personell)

Answer 194

Before Arbitration Panel Holds 1st Meeting

Answer 195

B) Approving customer accounts

Answer 196

B) municipal issuers.

Answer 197

D) 80% of the issuer's assets located in the state of incorporation.

Answer 198

D) the trust indenture.

Answer 199

D) electronically to EMMA.

Answer 200

D) Open-end investment company securities

Answer 201

C) A municipal principal does not have to be located at each branch office where municipal business is conducted.

Answer 202

C) recommendations of which securities to buy or sell.

Answer 203

II. not restricted. III. subject to volume restrictions under Rule 144 when sold.

Answer 204

C) bond rating.

Answer 205

C) hostile work environment.

Answer 206

A) by another customer of the broker-dealer carrying the account.

Answer 207

C) A director actively engaged in a member firm's securities business

Answer 208

D) not contact this person by phone.

Answer 209

B) commingling of a customer’s securities with those of other customers in a margin account.

Answer 210

B) officers of the managing underwriter. Issuer-directed sales are permitted if the persons to whom the new issue is sold are not restricted. Officers of the managing underwriter are restricted.

Answer 211

D) issuers. the rule deals with the sale of unregistered securities by nonaffiliated persons (e.g., investors who bought unregistered shares in a private placement) and the sale of registered stock by control persons and their affiliates (e.g., spouses).

Answer 212

D) if the customers are told that the report was prepared by a third party.

Answer 213

D) Official statements are not required to be sent to customers with exempt securities.

Answer 214

Only cancel an open order

Answer 215

I. The number of an issuer's exchange-listed equity securities is limited in any 90-day period. II. Short swing profits must be disgorged.

Answer 216

The MSRB has no jurisdiction over issuers, including their reliance upon anything.

Answer 217

C) Each tier is open to the public for investing.

Answer 218

on or before the business day following the trade date.

Answer 219

opening the account.

Answer 220

To be a foreign issuer, no more than 50% of its voting securities and no more than 20% of its debt securities can be owned by persons with U.S. addresses.

Answer 221

that there is more than one market for these bonds. In other words, all participants must be offering the bonds at the same price.

Answer 222

only a guide to fair markups and commissions

Answer 223

1. Only 1 MM 2. 25% average daily trading volume 3. Allowed

Answer 224

Associated Persons of the Broker Dealer

Answer 225

1. 30 days 2. Not Required from former to new employer

Answer 226

Not Engaged in Municipal Securities Business for 8 Consecutive Quarters

Answer 227

Not required to be physically located at the branch

Answer 228

1. Appoints an individual to oversee guardianship account 2. 60 days

Answer 229

Required on Account

Answer 230

1. No More than 100% of Debit Balance 2. 140% of Debit Balance

Answer 231

25% of LMV

Answer 232

5 business days

Answer 233

1. Customer Must Consent in writing 2. No Consent required

Answer 234

1. Quarterly 2. Monthly

Answer 235

1. Existence of Control Relationship 2. DPP Transaction

Answer 236

Written approval of Municipal Securites Principal or Municipal Securities Sales Principal for EACH transaction Includes Time & Date

Answer 237

1. Monthly 2. Quarterly

Answer 238

1. Accredited Only 2. Not allowed 3. Form D 4. 15 days of the first sale

Answer 239

1. Safeharbor to sellers allowing them to offer shares without being deemed engaged in a distribution 2. NOT UNDERWRITERS

Answer 240

Control - None Restricted - Holding Period

Answer 241

Control Stock - Always apply Restricted Nonaffiliate - Sell freely after holding period Affiliate - Volume Limits always

Answer 242

Control Stock - Always apply Restricted Nonaffiliate - Sell freely after holding period Affiliate - Volume Limits always

Answer 243

Exempt from holding period & volume limits

Answer 244

Agency Only UNLESS Firm is registered Market Maker or Block Positioner in the shock

Answer 245

1. 10 BDs 2. 60 Calendar Days

Answer 246

Those whose transactions are 5% or less of total revenues

Answer 247

No Action Required

Answer 248

Requires BDs to register in State AKA "Blue Sky Laws"

Answer 249

Each account entitled to separate customer status; separate from the accounts of its directors, partners, or owners

Answer 250

Considered a separate customer from other parties

Answer 251

Combined for coverage purposes

Answer 252

Combined for coverage purposes

Answer 253

Buying stock and selling it the next day to cover original purchase

Answer 254

right to charge a fee to borrow

Answer 255

1. From Borrower's Account 2. Directly from Issuer

Answer 256

Lender retains right but goes to buyer Borrower settles with lender on close-out

Answer 257

1. at or before Acct Opening 2. Annually

Answer 258

Only if written into the trust

Answer 259

Post Disclosure on Firm Website

Answer 260

Irrevocable

Answer 261

Both GO and Revenue Bond Combined i.e. State University

Answer 262

1. Unqual - without restriction 2. Qual - Expresses reservations with issue 3. No legal opinion

Answer 263

Obtain Discretionary Authority

Answer 264

Validation Letter

Answer 265

Net Position entered for tracking Purposes

Answer 266

Solicited/Unsolicited Discretionary or not

Answer 267

1. 10 days before Annual Meeting 2. Issuer reimburses firm

Answer 268

Used to submit responses to insider trading inquiries from SEC

Answer 269

Three Times the Profit made or loss avoided

Answer 270

5 years from transaction dates

Answer 271

Spouse, Parents, Childre, Siblings, In Laws, person who lives in HH or provides material support to or receives material support from DOES NOT INCLUDE Grandparents or Aunts/Uncles

Answer 272

1. $0.0001 2. in Sub Pennies 3. Whole Pennies only

Answer 273

1. Before Initial Transaction 2. Signed by customer

Answer 274

1. Not Allowed 2. Nonregistered Foreign persons may receive compensation for sending foreign referrals

Answer 275

Person engaging in business of effecting transactions in securities

Answer 276

Those acting on behalf of their own proprietary account

Answer 277

Resident Principal

Answer 278

After 3 unsuccessful attempts at reading a fingerprint card

Answer 279

Class Action Claims

Answer 280

at any time without consent of the mediator or other party

Answer 281

Both Firms complete the balance

Answer 282

Still prohibited

Answer 283

Ensures investors get National Best Bid or Offer (NBBO)

Answer 284

Names & address of person entering order

Answer 285

W8 - Foreign Validation Tax Status W9 - US Validation Tax Status

Answer 286

1.MORE THAN $10,000 single day 2. 15 Days 3. Form 112 4. Fed Reserve & Dept of Treasury

Answer 287

1. $5,000 in aggregate 2. 30 Days 3. FinCEN Report 111 4. FinCEN (Financial Crimes Enforcement Network)

Answer 288

1. $3,000 2. FinCEN Report 111

Answer 289

Like a Boutique Firm using Schwab to effect trades

Answer 290

1. 15 BDs 2. 10 BDs

Answer 291

Covered Call Writing only

Answer 292

1. Allowed 2. Never Allowed

Answer 293

Requires 50% up front

Answer 294

When it brings the account below minimum (25%)

Answer 295

Firm's Internal Minimum Margin for a Margin Account

Answer 296

30 days after IPO

Answer 297

Not Allowed

Answer 298

Must pay FULL Premium

Answer 299

Exception Reports

Answer 300

5 Year Records

Answer 301

3 Year Records

Answer 302

6 Year Records

Answer 303

1. 1 BD 2. 3 BDs 3. 5 BDs

Answer 304

Member must validate regardless

Answer 305

Agrees to participate in the program

Answer 306

MSRB, FINRA, CBOE

Answer 307

Full-Faith & Credit Bonds

Answer 308

1. Exempt 2. Exempt

Answer 309

All EXEMPT

Answer 310

They are not backed by Government Subject to Risks of hte Market

Answer 311

The Donor still controles

Answer 312

1. Not Included 2. Included

Answer 313

The Duty is Eliminated

Answer 314

1. Authorizes issuance of the bonds 2. Authorized sale of the bonds

Answer 315

Not Required by law

Answer 316

1. On/Before Settlement 2. Syndicate Manager has violated Board Rules

Answer 317

Bank Insurance Company Registered Investment Company Investment Adviser Natural Person with assets totaling over $50M

Answer 318

Must Describe as Escrowed to Maturity

Answer 319

1. 5 BD 2. 15 BD

Answer 320

Account is frozen until documents are presented

Answer 321

at least 48 hours in advance of sales

Answer 322

Owns at least $5M in investments or Person with $25M in discretionary basis

Answer 323

506(b) - Required to Nonaccredited Investors 506(c) - None Required

Answer 324

506(b) - Investor's Word 506(c) - Issuer reasonable attempt to verify

Answer 325

506(b) - up to 35 Nonaccredited 506(c) - Accredited Only

Answer 326

506(b) - Pre-Existing Relationship Required 506(c) - Freely to any Accredited Investor

Answer 327

1. 6 Months 2. 1 Year 3. No Holding Period

Answer 328

Offers and sales made outside the US by both US and Foreign issuer are excluded from Securites Act of 1933

Answer 329

1. Can only write calls against long positions 2. No options allowed

Answer 330

Does not apply

Answer 331

May not benefit from them

Answer 332

when traders are executing multiple trades in an attempt to fill a customer's order

Answer 333

25% of person's income over the last year directly or indirectly

Answer 334

1. Positive Affirmation Letter 2. Negative Consent Letter

Answer 335

1. 75% in securities issued by other companies (not investment company itself) 2. No more than 5% in securities of any one issuer 3. No more than 10% of voting shares of any one issuer 4. No conditions on remaining 25%

Answer 336

Prohibited

Answer 337

The Fund itself

Answer 338

Nasdaq must be two-sided OTC Market can be one-sided

Answer 339

Series 24 or Series 26 Principal

Answer 340

The Registered Party (not necessarily the accountant, ect)

Answer 341

1. 13 Consecutive Settlement Days 2. 35 Consecutive Settlement Days

Answer 342

1. Original Call for Funds under Reg T (i.e <50%) 2. Call for Add'l Money (i.e <25%)

Answer 343

Matched Orders

Answer 344

It ceases to be valid

Answer 345

A municipal securities principal A municipal securities sales principal

Answer 346

A municipal securities principal A municipal securities sales principal A general securities principal

Answer 347

Distribute it to institutional investors interested in the bond Distribute it to a buying customer instead of the official statement (AS A TEMPORARY SUBSTITUTE)

Answer 348

The employer member firm must be notified.

Answer 349

900 shares of ABCD at 91.50. The price to be reported through FINRA/Nasdaq Trade Reporting Facility (TRF) excludes commissions, markups, and markdowns.

Answer 350

Soft Dollars

Answer 351

lowest ask price at that moment.

Answer 352

C) whether, within the past year, the member was part of a selling group offering the issuer's securities.

Answer 353

1. the member must make an inquiry as to whether the ultimate purchaser is restricted. 2. It is not necessary to determine the identity and business affiliations of the purchaser

Answer 354

B) obtain a representation from the bank that the purchaser is not restricted.

Answer 355

1. no later than account opening. 2. at least 30 days in advance 3. may be done electronically (by email or posting on the firm's website).

Answer 356

Accredited Investors informational meetings open solely to offerees and their representatives

Answer 357

1. specifically designated inactive status 2. Prohibited 3. Can still receive Commissions

Answer 358

1. 10 BDs 2. 20 BDs

Answer 359

Structuring

Answer 360

1. 10 BDs 2. 60 Calendar Days

Answer 361

register with the state as an Investment Adviser Representative.

Answer 362

register with the state as an Investment Adviser.

Answer 363

state, local, and federal office.

Answer 364

The fund will liquidate shares to meet the additional sales charge.

Answer 365

Nonbinding

Answer 366

$20,000 Assuming that the customer paid for the securities in full, he would generate $20,000 in SMA. Because the customer need pay only half of the securities' value ($20,000), the additional cash paid ($20,000) would be considered a nonrequired cash deposit and would be credited to the SMA. Another way to look at it is the customer has fully paid securities with a loan value of 50%, or $11,000.

Answer 367

Exchange-traded notes (ETNs) The question describes an individual with a low risk tolerance, so the Treasury bonds and CDs would certainly be considered appropriate. Because ETNs are debt securities backed solely by a single issuer while an ETF based on a specific index of debt securities represents a large group of issuers, they are only suitable for those who can understand and take the risks involved.

Answer 368

not exceed $10 million. Regulation D offerings are exempt under the Securities Act of 1933. Rule 504 deals with private placements in which the dollar amount to be sold is $10 million or less.

Answer 369

purchasing a hedge fund. Although the T-bills and the CDs will reduce the overall risk, they are not the best answer because the question is dealing with an aggressive investor. One of the reasons high net worth customers buy hedge funds is for the diversification offered by adding an asset subclass to their portfolios.

Answer 370

is not required to take any action because the spouse is not an employee. Although Rule G-28 applies to the spouse or minor children of a customer who is employed by another municipal securities dealer, there is currently no requirement for a municipal securities dealer to seek to obtain information about the employment status of spouses or minor children. Accordingly, a dealer is not required to ask customers whether their spouses are employed by another municipal securities dealer. A municipal securities dealer would have to comply with rule G-28 only if the dealer actually knows that a spouse is employed by another municipal securities broker-dealer which is not apparent in this question.

Answer 371

Disputes regarding Uniform Practice Code provisions are handled through the Code of Arbitration Procedure.

Answer 372

buy XYZ at $39.75. A firm may not trade ahead of a customer's order at a price equal to or better than the customer's order.

Answer 373

1. Assets of the fund 2. all shareholders.

Answer 374

ONLY MAKE AVAILABLE UPON REQUEST (not required)

Answer 375

contemporaneously with the sale or earlier. Form 144 must be filed concurrently with or before the sale. The form must also be filed as amended if there a change.

Answer 376

a regulated lender such as an affiliated broker-dealer or an affiliated bank.

Answer 377

The insurance company issuing the variable annuity bears mortality risk, or the danger that some annuitants will live to surpass their average life expectancy.

Answer 378

inflationary risk market risk interest rate risk

Answer 379

None of the funds in the plan have been taxed so the employee's cost basis is $0. When funds from the annuity are taken during retirement, because none of the funds in the plan were taxed earlier, all of each annuity payment is taxed, but very likely at a lower rate.

Answer 380

Mergers and acquisitions require the filing of a registration statement (Form S-4) by the acquiring company. Changes in par value do not require a filing.

Answer 381

keep the clients' securities and funds segregated and identified.

Answer 382

At least Every 3 months

Answer 383

1. that proper instructions have been given to the bank. 2. 35 Calendar Days

Answer 384

1- Fair Market Value 2. Dealer is entitled to a profit 3. Retail or Institutional client Yield is the most important factor in determining the fairness and reasonableness of price in any given municipal securities transaction. The yield resulting from a trade should be in line with the yield found on other securities of comparable quality, maturity, coupon rate, and block size available in the market at that time. In this sense, improved market conditions may be relevant in determining a fair and reasonable price. Rule G-30 specifically states that the total dollar amount of the transaction is relevant in determining a fair and reasonable price. The fact that institutional transactions are frequently larger than retail transactions may also enter into fair and reasonable pricing.

Answer 385

Only allowed if the Teller is Registered

Answer 386

The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close.

Answer 387

name(s) of the dealer(s) involved.

Answer 388

1. settlement date 2. at or before the completion of the transaction (settlement day)

Answer 389

DPPs require complete financial disclosure because of minimum suitability standards set by the states in which they are sold. REITs, unit investment trusts, and variable contracts do not have specific net worth suitability requirements for investors.

Answer 390

$20M in 12 months and & $6M sold on behalf of shareholders $75M & $15M

Answer 391

Allowed on TV, Social Media, ect.

Answer 392

the lowest potential yield on the bond.

Answer 393

deposit an amount, in cash, equal to the value of the borrowed shares.

Answer 394

GOs Not Revenue Bonds

Answer 395

an investment company product

Answer 396

Initial Issues but not required for Secondary Market Trades of previously issued securities

Answer 397

mark to the market. When a securities contract has been entered into but not settled and the market value changes materially, the person who is partially unsecured may demand a mark to the market (or deposit) to cover the difference.

Answer 398

the bondholders would receive the shares rather than their principal when the bond matured.

Answer 399

Not Required

Answer 400

he may not attend nor speak at the road show. Under the conflict of interest rules, research analysts are prohibited from participating in road shows relating to any investment banking transaction.

Answer 401

volume-weighted average price (VWAP) of a security

Answer 402

the Federal Reserve Board

Answer 403

The Sponsor (Underwriter)

Answer 404

immediately after receiving it.

Answer 405

Final & Binding

Answer 406

Either Side

Answer 407

30 minutes

Answer 408

30 minutes

Answer 409

$25 million or treble damages, whichever is greater.

Answer 410

1. $5M 2. 20 Years

Answer 411

up to three times the profit made or loss avoided (i.e., treble damages)

Answer 412

$1 million or three times the amount of profit made or loss avoided, whichever is greater.

Answer 413

within 3 business days.

Answer 414

tax-qualified or pre-tax

Answer 415

the Market Operations Review Committee (MORC).

Answer 416

At least 48 hours before the confirmation

Answer 417

The Investor Brochure

Answer 418

Annually in writing or electronic

Answer 419

Number of bonds involved in the transaction Yield to maturity

Answer 420

1. Allowed 2. Allowed if all beneficiaries approved

Answer 421

decreases.

Answer 422

purchasers receive specific information about the proposed issue. Under Rule 506 of Regulation D, investors must be given specific information about the proposed private placement, including financial statements.

Answer 423

approved by a designated supervisor. retained for three years.

Answer 424

permitted on an order-by-order basis. Trading along requires an agreement with the customer on an order-by-order basis. Blanket approvals are prohibited.

Answer 425

D) Calling noncustomers who are acquaintances may be acceptable within telemarketing rules. A personal relationship exception under the cold calling rule means any family member, friend, or acquaintance of the AP who makes an outbound telephone call.

Answer 426

A) need not be designated as a supervisor of the separately identifiable department. A senior officer of the bank may set bank policies that affect the bank dealer without being considered the dealer's supervisor. The supervisor is the person responsible for the dealer's day-to-day business.

Answer 427

Minimum maintenance margin in a long account is 25% of the current market value. The computation is as follows: 25% × $7,000 = $1,750.

Answer 428

A) registered securities by a minority shareholder of the issuer. Rule 144 applies to the sale of unregistered securities owned by affiliates or nonaffiliates and the sale of control stock. It does not apply to the sale of registered securities by nonaffiliated persons.

Answer 429

D) The suspension of an associated person's registration FINRA releases information to the public with respect to any disciplinary decision that imposes a suspension, cancellation, or expulsion of a member; suspends or revokes an associated person's registration; suspends or bars an associated person; or imposes monetary sanctions of $15,000 or more.

Answer 430

negotiated bids. Competitive bids may be made within the 24-month period.

Answer 431

D) There is no requirement to take the Series 7 exam and she returns to the Regulatory Element rotation based on original registration hire date. Special inactive status is granted to those people called up for active duty in the Armed Forces of the United States, including those called up for active duty in the 24 months following separation from a member firm. The individual is under no obligation to fulfill a continuing education requirement until she returns from active duty. In this case, she re-associates with a member firm within 90 days of return and will fall back into her normal CE rotation and there is no need to requalify by exam.

Answer 432

I. Adequate current information must be available regarding the issuer. III. The stock must be fully paid. To sell unregistered stock under Rule 144, the shares must be held fully paid for six months, and there must be current information available regarding the issuer (e.g., the issuer is filing reports with the SEC). Control stock is always subject to volume restrictions.

Answer 433

C) inside offer. Under the 5% policy, markup percentages are calculated from the prevailing market price. This is a sale to a customer from inventory, so FINRA requires the markup to be calculated from the inside offer at the time of the sale.

Answer 434

B) Negotiated offerings MSRB Rule G-37 deals with negotiated offerings and financial advisory work. The rule prohibits municipal firms from engaging in municipal securities business with an issuer for two years after any political contribution is made to an official of that issuer by the firm. It does not affect competitive offerings in which a firm is chosen as an underwriter based on lowest net interest cost.

Answer 435

All Commissions may be paid from sales charges, both front end and back end. In addition, 12b-1 fees, which are charged against the assets of the fund, may also be used.

Answer 436

daily Carrying firms have the daily requirement to bring under possession (in‑house) or control (in an account controlled by the firm) all fully paid for customer securities and all excess margin securities. Each day, from the prior day's settlement records, a carrying firm must take steps to ensure that it has obtained physical possession or control over such securities.

Answer 437

the SEC no later than the time the order is placed. The SEC must be notified on Form 144 concurrent with or before the time the order is placed.

Answer 438

D) fluctuating interest. Customers pay interest on margin debit balances based on the call loan rate (also known as broker's call). This rate fluctuates daily.

Answer 439

D) fluctuating interest. Customers pay interest on margin debit balances based on the call loan rate (also known as broker's call). This rate fluctuates daily.

Answer 440

D) one or more limited partnerships are combined into a new entity. A roll-up transaction frequently involves the formation of a new partnership by combining one or more existing partnerships into a single, more liquid entity.

Answer 441

B) laddering. Laddering is the prohibited practice of inflating pre-IPO prices for the sake of obtaining a greater allotment of the offering.

Answer 442

laddering.

Answer 443

Censure, which is used by an SRO to sanction a member firm for minor violations, is not grounds for a statutory disqualification.

Answer 444

D) The person has not been registered with FINRA, a national securities exchange, or a state securities regulator within the last 10 years. The individual is not included in BrokerCheck because he is not currently registered with FINRA, a national securities exchange, or a state securities regulator and has not been so registered within the last 10 years. Alternatively, the representative has not been registered and either is not the subject of a final regulatory action; has not been convicted of or pled guilty or no contest to certain crimes; has not been subject to a civil injunction involving investment-related activity or been found in a civil court to have been involved in a violation of investment-related statutes or regulations; or has not been named as a respondent or defendant in an arbitration or civil litigation in which he was alleged to have committed a sales practice violation, and which resulted in an award or civil judgment against the individual.

Answer 445

D) for a family member. Unless the prospective buyer is a family member, officers and directors of issuers may not act as purchaser representatives.

Answer 446

I. A seller is not obligated to deliver securities on the second business day following the trade date. II. A seller can make delivery and collect proceeds on any day following the second business day (the normal settlement date) through the final calendar date specified in the contract, provided the seller gives the buyer a one-day notice. Seller's option contracts are used to lock in a selling price on a security that, for whatever reason, is not immediately available for delivery.

Answer 447

Seller's option contracts

Answer 448

D) highest bid. In an active, competitive market, the prevailing market price for determining markup or markdown is the inside market at time of sale. For markups, it is the lowest offer. For markdowns, it is the highest bid.

Answer 449

lowest offer.

Answer 450

highest bid.

Answer 451

A) whether, within the past year, the member was part of a selling group offering the issuer's securities. Under FINRA rules, research reports must disclose whether the member is a market maker in the security being recommended, whether a control relationship exists between the member and the issuer of the recommended security, the market price of the recommended security as of the report date, and whether the member was a manager or co-manager of any offering of the issuer within the prior year. Being part of a selling group is not a required disclosure.

Answer 452

taking customer securities in a margin account to another bank to do the loan.

Answer 453

Reg T - Broker Dealer to Customer loans Reg U - Bank to Broker Dealer loans

Answer 454

Below Reg T min of 50%

Answer 455

1. Sell Out 2. Account Frozen for 90 days 3. May still purchase but must fund 100%

Answer 456

$15,000 or more

Answer 457

1 day prior notice, Buyer must pay for stock at that time

Answer 458

No Settlement Date, No Accrued Interest No Total Dollar Amount

Answer 459

FINRA - 3 Years MSRB - 4 Years

Answer 460

B) trading along. Trading along allows a market maker to buy or sell an agreed-upon amount at a price that would satisfy an institution's order to buy or sell. For example, assume an institution wants to buy 100,000 shares at 38.15. If 60,000 shares become available at that price and the market maker has an agreement in place to trade along on a 50-50 basis, the market maker would take 30,000 shares as principal and the institution the remaining 30,000 shares. Without an agreement with the institution, the market maker, under the limit order protection rule, would be obligated to execute the entire 60,000 shares for the institution's account. Under FINRA rules, trading along agreements must be on an order-by-order basis. There can be no blanket agreements.

Answer 461

C) SIFMA. The MSRB works in the SEC, FINRA, and with banking regulators on matters of rule enforcement, examinations of members, and surveillance.

Answer 462

Trailer commissions, also known as quarterly trailers, are associated with mutual funds that charge 12b-1 fees. These fees are charged periodically, and the registered representative who sold the fund receives a percentage. These fees, and their commissions, follow the initial sale.

Answer 463

D) The Longshoremen Credit Union Securities professionals are quite limited in their ability to borrow money, especially from clients. The prime exception is when the client is in the money-lending business, for example, if the client is a credit union. Mortgage brokers do not lend money—they put borrowers and lenders together. The representative may also borrow money from immediate family members, but this is not clear in the choices. "An" investment adviser representative's father is too vague.

Answer 464

D) the use of transfers through several legal and governmental jurisdictions. The layering stage is where launderers attempt to conceal the source of the funds or assets. During this phase, launderers will wire transfer funds to multiple jurisdictions, deposit cash overseas, and resell assets in multiple jurisdictions. The key to successful layering is the crossing of several legal and governmental jurisdictions. This allows launderers to take full advantage of the varying degrees of regulation and the bureaucracy of different governmental cooperation laws.

Answer 465

A) under no circumstances. Registered representatives are forbidden from buying a new issue from an underwriter under Rule 5130.

Answer 466

Market value on the date a federal court is petitioned to appoint a trustee

Answer 467

before order execution.

Answer 468

The firm may issue a research report on the subject company. III. An analyst may make a public appearance regarding the subject company. If there is a significant news event affecting the subject company during the 10-day quiet period, a firm may issue a research report, and an analyst may make a public appearance if authorized to do so by a legal or compliance department official.

Answer 469

I. Control person selling registered stock held for one year II. Control person selling restricted stock held for two years Control persons are always subject to volume limitations.

Answer 470

C) have a registered person call the client, complete the form, and then review the account for approval. A registered person, not a sales assistant, must contact the client for the purpose of determining suitability.

Answer 471

I. Reprint of an article that has not been independently prepared II. Advertisement for recruiting registered representatives Tombstone advertisements relating to equity or debt securities are examples of items that are exempt from the filing and spot checking requirements under FINRA rules. Reprints, whether prepared independently or in-house, must be kept in an internal file for a minimum of three years. If the firm prepares a reprint, it is considered retail communication and, if dealing with investment company products, must be filed with FINRA within 10 days of first use (postfiling). Independently prepared reprints are subject to internal approval and filing only.

Answer 472

3 months As long as the contact is made within three months of the inquiry, there is no violation.

Answer 473

II. not restricted. III. subject to volume restrictions under Rule 144 when sold. Control stock purchased in the open market is registered and is therefore not restricted. While unrestricted control stock is not subject to the holding period requirements of Rule 144, it is always subject to the volume requirements of the rule.

Answer 474

1. EMMA 2. TRACE 3. TRF 4. Over-the-Counter Reporting Facility (ORF)

Answer 475

C) Stock dividends Stock dividends, unlike cash dividends, are not taxable in the year of receipt. Instead, they reduce the owner's cost basis and, when sold at a price above that cost basis, are treated as capital gain rather than ordinary income. Deferred annuities never generate anything but ordinary income, and qualified withdrawals from Section 529 plans result in no taxation on the earnings. If they are not qualified, there is ordinary income tax plus a penalty.

Answer 476

B) be routed to the next market maker in line. Under Nasdaq trading rules, locked or crossed markets will be eliminated during regular market hours. If a firm attempts to lock the market, the order will be routed to the next market maker in line for an execution at the locking quote.In a firm-commitment arrangement, any losses incurred are divided among the underwriters' syndicate members, according to the terms in the agreement among underwriters.

Answer 477

C) any time after the settlement date. A sellout occurs when a member sells securities to another member (the buyer) and the buyer fails to pay when the securities are delivered on settlement date. Sellouts can be executed any time after the settlement date. Unlike buy-ins, no prior written notice is required.

Answer 478

D) By completion in an online data entry system and uploading Form G-37 in portable document file (PDF) format The filing of Form G-37 may be accomplished online by uploading it on the data entry system. All uploaded attachments must be PDFs. Form G-37 is available to the public for viewing and printing through the MSRB website. No other method, including email or fax is permissible.

Answer 479

D) Coverdell Education Savings Account (ESA) The key to this choice is the contribution level. The Coverdell ESA has a maximum annual limit of $2,000 and offers tax-free growth. Why not the Section 529 plan? Invariably, that will be the correct choice when the question involves higher contribution amounts or tax benefits on a state level. When the couple can only contribute $1,800 per year, it seems logical to assume that they are in a low tax bracket where those benefits would be of minimal value. UTMA accounts offer less flexibility, and the annuity would not be suitable for anyone wishing to use the funds before age 59½.

Answer 480

C) require the customer's check to clear before authorizing payment. It is a good practice to wait for the customer's check to clear before authorizing payment for the proceeds.

Answer 481

D) The agent receives no compensation for assisting a family member transfer ownership of a security to another party. Under the law, it would be considered contrary to the standards imposed for an agent to effect securities transactions not recorded on the regular books or records of the broker-dealer that the agent represents. If, however, someone asks for help in transferring ownership of a security to another party and no compensation is paid, it is allowed.

Answer 482

Market makers—broker-dealers all over the country who have agreed to maintain an inventory of a particular company's stock—drive the OTC market. They are said to be "making the market" in the stock of that company. A market maker must stand willing to buy or sell at least one round lot of shares of the company for which it is a market maker at the current bid price that it has published. Therefore, if a customer is a buyer or seller of a stock that has sufficient investor interest to have a member firm register as a market maker, there is a willing party representing the other side to your trade. This is the liquidity of the OTC market. Designated market makers (DMMs) are similar but operate on the NYSE not in the OTC market.

Answer 483

B) a registered representative's primary residence where meetings with clients take place on a regular basis. For a primary residence to be exempt, the representative may not meet with customers at this location.

Answer 484

B) If the sale will not increase the account's percentage equity ownership in XYZ above the level as of three months before filing the registration statement

Answer 485

C) The branch office manager should call the customer to review the features of Class A shares and the reasons for the customers Class C share purchase decision.

Answer 486

C) three business day following the transaction date. Seller's (and buyer's) option trade settlements are made no earlier than three business days after the trade date, or in other words, one day following regular way settlement for corporate securities, T+2 business days. If the seller or buyer could deliver earlier, there would be no need for a contract.

Answer 487

A) only if the tool is likely to be passed on to retail customers by the recipient. Ordinarily, members who submit an analysis tool to institutional customers are under no burden of having to submit it to FINRA. However, if it reasonable believes that the tool would be then forwarded by the institution to its retail customers, it is then subject to the requirements of Rule 2210 to file with FINRA.

Answer 488

the underwriters' syndicate members, according to the terms in the agreement among underwriters.

Answer 489

C) Custodian's name, minor's name and Social Security number, and state of registration Each account set up under UGMA must include the state of registration, the minor's name and Social Security number, and the custodian's name (the nominal owner of the account).

Answer 490

B) Open court proceedings Harassment and discrimination controversies are eligible to be litigated in open court.

Answer 491

C) Abstract of an official statement MSRB rules consider all forms of mass public communication to be advertising except listings of dealer inventories, official statements, and preliminary official statements.

Answer 492

threshold securities.

Answer 493

1,000 With carve-out procedures in place, no more than 10% of the shares from a new issue equity investment may be attributed to the accounts of restricted partners.

Answer 494

Gifts should be valued at the higher of cost or market value, exclusive of tax and delivery charges.

Answer 495

trade is executed.

Answer 496

D) whether the firm owns 1% or more of the subject company's debt securities. The firm must disclose whether it owned, at the close of the previous month, 1% or more of any class of the subject issuer's equity securities. Firms must also explain their rating systems and disclose whether analyst compensation is tied to the firm's investment banking revenues, the analyst or household members have any financial interest in the subject company, the firm has received fees for investment banking services or has managed or co-managed a public offering for the subject issuer within the past 12 months, and the firm either expects to receive or intends to seek any investment banking fees from the subject issuer in the 3 months following publication.

Answer 497

FINRA (not the SEC)

Answer 498

B) accepting the check. Accepting and depositing a check for securities not yet registered constitutes a sale. Selling unregistered securities raises a host of violations at both the federal and state levels.

Answer 499

Not subject to the 2 year band

Answer 500

contributions to that person.

Answer 501

Section 529 only

Answer 502

Earnings only

Answer 503

1. Nasdaq Market Operations within 30 minutes 2. Market Operations Review Committee within 30 minutes To have a clearly erroneous trade reviewed, a member must notify Nasdaq Market Operations within 30 minutes of the trade. Appeals of any decision are made to the Market Operations Review Committee.

Answer 504

always trigger a two-year bar from the municipality's negotiated underwriting activity.

Answer 505

must be excluded from the report before presenting it to the subject issuer.

Answer 506

generally prohibited unless the broker-dealers with which the agents are associated are under common ownership or control.

Answer 507

D) $4,000.00 Because this is a nonqualified annuity (with no tax deduction), the client pays taxes only on the growth portion or, in this case, $10,000. The tax on this amount is $3,000. However, because the client is not yet age 59½ when making the withdrawal, he also pays a 10% tax penalty, or $1,000. This makes a total of $4,000 tax and tax penalty paid on the random withdrawal.

Answer 508

inform the customer that it will be provided if the customer makes a written request.

Answer 509

B) A registered representative at a limited business broker-dealer A limited business broker-dealer is one engaged solely in the purchase and sale of investment company/variable contract securities and/or direct participation programs. Employees of these firms, registered or otherwise, are permitted to buy new equity issues at the POP. Note that this exemption applies only to employees of these firms not to the firm itself.

Answer 510

D) Smith & Company, "Smith & Co.", or "Smith and Company." Corporate signers are the exception to the general rule that endorsement of a certificate must match exactly the name on the front. The word and may be substituted with & and the word company may be abbreviated Co.

Answer 511

Best efforts Underwriters assume no financial liability for unsold shares in a best efforts underwriting.

Answer 512

U.S.-based issuers to non-U.S. residents. Regulation S provides a safe harbor for U.S.-based issuers that sell securities outside the United States. As long as the provisions of Regulation S are met, the securities are exempt from registration with the SEC. To get the exemption, the issue must be sold in an offshore transaction to non-U.S. residents.

Answer 513

marking the close. Marking the close is a form of market manipulation. It is an attempt at influencing the closing price of a stock by purchasing (or selling) at or near the close. The effect of this can artificially inflate (or deflate in the case of selling) the closing price as well as affect the price of market-on-close orders. Severe sanctions may be imposed on those looking to manipulate the market by marking the close.

Answer 514

on the date of the transaction, any gain or loss is recognized for tax purposes.

Answer 515

C) the Uniform Practice Code Committee. FINRA disciplinary proceedings take place under the Code of Procedure where the Department of Enforcement and various appellate bodies may sanction members and associated persons. The Uniform Practice Code covers such rules as regular way and being T+2 for corporate securities. That code has nothing to do with enforcement.

Answer 516

G-27 is the MSRB rule covering supervision. It requires all trades to be reported promptly and customer accounts to be reviewed frequently.

Answer 517

settlement of the transaction. Rule G-32 requires that any dealer (not just the underwriter) selling municipal securities to a customer during the issue's underwriting period must deliver the official statement in final form, if any, to the customer by settlement of the transaction.

Answer 518

C) The current maximum per child An indexed maximum contribution may be invested in each child's Coverdell ESA every year. For instance, if a couple has three children, they may invest the current maximum into each of three accounts.

Answer 519

B) a statement by the analyst certifying that he has not or ever will accept compensation for specific recommendations or views contained in a research report. Analysts that provide research reports must include a statement certifying that the views expressed in the reports accurately reflect the analyst's personal views about the subject securities and issuers and that no part of his compensation is related to the specific recommendations. However, if the analyst's compensation is, in fact, related to the specific recommendations or views, the statement must include the source, amount, and purpose of the compensation and further disclose that it may influence the recommendation in the research report.

Answer 520

B) net redemptions. In adverse market conditions, not only do some investors stop putting money in, they also liquidate their holdings. If new sales fall while liquidations rise, the effect could be net redemptions. The NAV is not affected by supply and demand, and if anything, the expense ratio would rise because some of the expenses would remain the same but would be shared by fewer assets. Mutual funds do not receive the sales charges—they go to the underwriter. ** This question deals with material not covered in your LEM, but it relates to recent rule changes and/or student feedback.

Answer 521

II. Excessive journal entry transactions between unrelated accounts III. Lack of concern regarding risk Examples of red flags that may indicate money laundering include a lack of concern regarding risks, commissions, or other transaction costs, and a large number of wire transfers to unrelated third parties.

Answer 522

I. Employees of limited business member firms may purchase an equity IPO. IV. Limited business member firms may not purchase an equity IPO. There is an exemption under the rule for employees of limited business member firms. A limited business firm is one engaged solely in the purchase and sale of investment company securities and/or direct participation programs. The exemption only applies to employees of a limited business firm not to the firm itself.

Answer 523

on or before settlement.

Answer 524

still needs to give written notification and receive written approval from employer member

Answer 525

140% of the customer's debit balance. Excess margin securities are securities in excess of 140% of the customer's debit balance. Margin securities (140% of the debit balance) are at a bank collateralizing the customer's debit. For example, if a customer purchases $20,000 of stock, the customer will put up $10,000 and borrow $10,000. The member will take $14,000 of the stock to a bank to collateralize the $10,000 debit. The balance ($6,000) of the stock must be placed in segregation (excess margin securities).

Answer 526

not allowed

Answer 527

apply to all family members within the same fund family

Answer 528

A) Municipal bonds A FINRA member can only join in underwritings of non-exempt securities with other members. Municipal bonds as well as U.S. government debt can be underwritten by non-member banks.

Answer 529

Every sell order must be marked as either a long, short, or short exempt.

Answer 530

is not required

Answer 531

A) the time of order entry. The MSRB requires the following be placed on an agency order ticket: time of receipt, date of receipt, and execution price. Time of order entry on the ticket is not required. This question refers to a recordkeeping rule of the MSRB. Specifically, Rule G-8(a)(vi) covers recordkeeping and (vii) deals with principal trades, which is very similar.

Answer 532

C) quarterly. FINRA Rule 3110(d) states that within 10 business days of the end of each calendar quarter, a written report describing each internal investigation of its investment banking activities initiated in the previous calendar quarter by the member firm must be submitted to FINRA.

Answer 533

not required to be reported on Form G-37.

Answer 534

Affinity fraud

Answer 535

A) registered securities by a minority shareholder of the issuer. SEC Rule 144 pertains to the sale of unregistered securities owned by affiliates or nonaffiliates and the sale of control stock. It does not apply to the sale of registered securities by nonaffiliated persons.

Answer 536

must receive prior employer approval in order to engage

Answer 537

highest current independent bid in the security's principal market.

Answer 538

a prospectus.

Answer 539

1. 20% 2. 5 Years

Answer 540

quarterly.

Answer 541

requires both written disclosure to and consent of the client before the completion of the transaction.

Answer 542

stock splits or stock dividends.

Answer 543

A) when the securities are delivered into the customer's account. Under FINRA rules, if a customer pays for securities purchased before the settlement date, the trade is considered complete when the securities are delivered into the account. This should occur on settlement date.

Answer 544

disclosure to the client

Answer 545

Does not apply

Answer 546

B) XYZ Municipal Bond Fund Tax-exempt securities (such as municipal bonds) are generally considered unsuitable to include in a tax-deferred retirement plan. That said, if the municipal bonds were taxable then that's a different story.

Answer 547

A) The total prevailing market price, the markup, and the markup percentage The confirmation must show the PMP amount, the markup, and the markup percentage. With this information being transparent, a fairer and more reasonable markup amount is likely.

Answer 548

A mini-max

Answer 549

II. a research principal, and with limited exceptions, a general securities principal. Research reports must be prepared by a supervisory analyst and approved by a research principal. A chartered financial analyst is not qualified to approve reports based solely on that professional designation.

Answer 550

Rumors must be reported to the branch manager.

Answer 551

B) 82. Interest begins to accrue on the prior interest payment date and accrues up to—but not including—settlement date. Regular way settlement for a trade executed on Friday, May 19, is Tuesday, May 23. The computation is 30 days (March) + 30 days (April) + 22 days (May) = 82 days (total). For corporate and municipal bonds, every month has 30 interest days.

Answer 552

C) arbitration only if both parties agree. Claims alleging discrimination, including sexual harassment claims, are not required to be arbitrated unless both parties agree.

Answer 553

B) obtain a representation from the conduit that the purchaser is not a restricted person. When receiving an order to buy a new equity issue from a bank, investment adviser, or another conduit, a member must obtain a representation from the conduit that all purchasers comply with FINRA Rule 5130 (i.e., they are not restricted persons).

Answer 554

common stock.

Answer 555

A suspicious activity report must be filed with FinCEN if a firm suspects a customer is engaged in money laundering.

Answer 556

A) does not need to send the notice, but it may do so if it chooses. There is no requirement to transmit the notice to a customer outside the United States.

Answer 557

A) municipal bonds. Exempt securities such as U.S. government and municipal bonds are not reported on the TRACE system. Municipal debt trades are reported through the Electronic Municipal Market Access (EMMA) system.

Answer 558

FINRA (not SEC) If an associated person is denied registration, suspended, or expelled by another SRO, FINRA must be notified promptly. There is no requirement to notify the SEC.

Answer 559

The CIP does not ask if the account holder is male or female.

Answer 560

C) not misleading if the bonds are also described as subject to AMT. If the income from a bond is subject to the AMT, advertisements for the bond must state this fact. The AMT does not affect the majority of taxpayers; therefore, the income tax is exempt for most customers. The bonds may be described as tax exempt without violating MSRB rules.

Answer 561

A) two years. Although an associated person's resignation is not effective with FINRA for 30 days, if a customer complaint or some other unresolved concern exists, FINRA retains jurisdiction over the AP for up to two years. In other words, if FINRA chooses to call the former AP in for a hearing, that person would be obligated to attend for up to two years.

Answer 562

Weekly Carrying firms must perform a reserve computation weekly, usually on Monday or Friday. Firms compute monies owed to the firm by customers (debits) and monies owed by the firm to customers (credits). If credits exceed debits, that difference must be on deposit in their Special Reserve Bank Account for the exclusive benefit of customers by 10:00 am on Tuesday. Performing the reserve computation monthly is an available option under certain conditions; however, the standard practice is weekly.

Answer 563

12 Months A Regulation A Tier 2 offering exemption allows issuers to sell up to $75 million of securities without going through a full-blown registration. A Regulation A offering is sometimes called the small offering exemption. The $75 million ceiling is measured over a 12-month period. Regulation A is sometimes known as Regulation A+.

Answer 564

A) Six years Under SEC rules, customer account records must be maintained for six years following the closing of an account.

Answer 565

C) 1.5 million. Sales by a control person come under Rule 144. The limit is the greater of 1% of the outstanding shares, or the average weekly trading in the stock over the preceding four weeks. One percent of the outstanding number of shares is 350,000. The average weekly trading is 1.5 million shares (did you notice the 300,000 was the daily average not the weekly?) The greater of the two is clearly the 1.5 million shares and at the current market price of $50 per share, that will buy a lot of luxury.

Answer 566

D) $220,000 Explanation Coverage under SIPC is up to $500,000 per separate customer. Of that total, SIPC covers up to $250,000 in cash. Outside, independent money market fund shares are investment company securities, and SIPC coverage does not apply nor is even necessary since the customer can contact the money fund manager directly to access shares.

Answer 567

B) Size of orders at a location In making this determination, members should consider the following: whether registered persons at a location have regular contact with the public, the number of registered persons at a location, whether the location is geographically distant from another OSJ of the firm, whether the securities activities are diverse and/or complex, and whether the member's registered persons are geographically dispersed.

Answer 568

D) a nonbranch. Excluded from the definition of a branch office is any location used primarily for non-securities business (e.g., insurance sales) and from which fewer than 25 securities transactions are effected annually. A location of convenience is any location used occasionally and by appointment.

Answer 569

promptly after execution All order tickets must be reviewed, individually or as part of a trade blotter, promptly after execution.

Answer 570

C) conduct business with the client as usual. Explanation Even though the college program is called a resident program that does not mean that the client has changed his state of residence. Although neither the firm nor the agent is registered in Utah, the agent may continue to conduct business with the client. This is because both the agent and his firm are properly registered in the client's state of permanent residence.

Answer 571

the beginning of regular trading hours on T+3. The rule requires that a mandatory buy-in take place for those short sales that there is a fail to deliver. The buy-in must happen the first thing (prior to trading) on the day following settlement date S+1, or in other words T+3. Had there been a long sale fail or fail attributable to bona fide market making, the answer would be T+5. Bona fide market makers need not operate under the same locate requirement that other broker-dealers must abide because they provide liquidity. However, market makers are not excepted from the close out requirement. Market makers and those who made long sales must be able to demonstrate to FINRA that that is the case, otherwise selling stock short without having a good locate puts them in violation of Regulation SHO. Moreover, those who deceive about their intention or ability to deliver securities in time for settlement are committing fraud, in violation of SEC rules, when they fail to deliver by settlement date.

Answer 572

D) Nasdaq Select Market securities are marginable. The Federal Reserve approves all Nasdaq Select Market securities for margin. Any other over-the-counter security must be on the over-the-counter margin list approved by the Fed to be marginable. Any exchange-listed security is marginable.

Answer 573

A) any persons owning 5% or more of a member firm. FINRA Rule 5130 prohibits member firms from selling initial equity public offering stock to any account in which restricted persons are beneficial owners. Restricted persons include FINRA members, employees of member firms, finders, and fiduciaries acting on behalf of the managing underwriter, portfolio managers, and any person owning 10% or more of a member firm. Also included are a restricted person's immediate family members.

Answer 574

C) A foreign custodian bank Good control locations include other broker-dealers (in the United States), commercial banks, and depositories, such as Depository Trust Company (DTC). With SEC approval, foreign depositories, foreign clearing agencies, and foreign custodian banks such as the Royal Bank of Scotland or Deutsche Bank, are satisfactory control locations. Foreign broker-dealers are not. Furthermore, credit unions and S&Ls are not acceptable as control locations.

Answer 575

15 days after the first sale. Issuers wishing to avail themselves of the private placement exemption offered under Regulation D of the Securities Act of 1933 must file a Form D with the SEC no later than 15 days after the first sale.

Answer 576

D) The SEC The Securities Exchange Act of 1934 granted the SEC the power to close any registered stock exchange for up to 90 days. All that is required is notice to the president of the United States.

Answer 577

B) 5.96%. An investor who purchases this type of dollar-priced fixed income security for less than par may expect a yield to maturity that is somewhat higher than the coupon or stated rate.

Answer 578

For cash settlement trades (same day settlement), the ex-date is one business day after the record date.

Answer 579

twice a month. Short positions in Nasdaq securities in both customer and proprietary accounts must be reported to FINRA twice a month. This is referred to as short interest reporting.

Answer 580

Durable Durable power of attorney remains in force if the client becomes incapacitated. Power of attorney, durable or nondurable, is revoked upon the death of the grantor.

Answer 581

Prohibited FINRA prohibits the use of repurchase agreements in connection with nonexempt securities. They may be used, however, in connection with exempt securities such as U.S. governments and municipals.

Answer 582

order execution. All self-regulatory organization rules require that the account name or number be placed on an order ticket before order execution.

Answer 583

I. Short sales II. Long sales where the securities are held by the customer Affirmative determination is required both for long sales where the customer is in possession of the securities and for short sales.

Answer 584

Sellouts - (no written notice) anytime after the settlement date Buy-Ins - written notice NLT Noon 2 BDs before

Answer 585

Coins minted for the U.S. Treasury, such as the Morgan of American Double Eagle, are eligible for inclusion in an IRA. No life insurance is allowed (though annuities, both fixed and variable, are allowed). Collectibles, such as art and stamps, may not be included.

Answer 586

Agency According to the Investment Company Act of 1940, transactions in managed accounts must be executed on an agency basis. If the adviser is acting in the capacity of a broker-dealer, he must disclose this information and receive the customer's consent before completing any principal transactions.

Answer 587

A) a house call. Explanation When additional funds are required, it is known as a house or maintenance call. If based on the firm's stricter requirement, it is a house call; if based on the requirement of the SRO, it is a maintenance call. The initial or Regulation T call occurs at the time of the purchase. If any call for funds is not met, then there will be a sellout.

Answer 588

A. Social Security Number Explanation If a social security or tax ID number is unavailable, you may open the account. The municipal securities professional must make a reasonable effort to obtain it and if unable to do so, the firm is required to keep a record of that fact. All other customer account information listed here must be obtained before the settlement of a transaction. It's the MSRB's sense that that is reasonable since the information is basic and important.

Answer 589

B) A Principal Explanation The customer's signature is not required to open a cash account. For any account, the registered representative must sign the new account form indicating that the information therein is true and complete. A principal must review, and then accept, the new account by signing the form.

Answer 590

I. They are considered day orders. III. The exercise of time or price discretion must be noted on the order ticket. Explanation A not held order is one in which the customer gives a representative discretion over the price or timing of the order. It is not discretionary. In addition, retail not held orders must be executed on the day received unless the customer has provided written and signed instructions to the contrary. The exercise of time or price discretion must be noted on the order ticket.

Answer 591

A) Gold & Platinum Explanation The Federal Reserve Board permits in accounts it has regulatory authority over under Regulation T, such as special cash and margin accounts, to have only securities positions, not actual commodities such as precious metals. Non-securities accounts may on the other hand have actual commodities as well as forwards and futures contracts. These assets have entirely different margin rules.

Answer 592

II. There are no contribution limits at the federal level. III. There are contribution limits at the state level. Federal tax law does not address contribution limits. However, each state sets a maximum contribution limit for its 529 plan. LO 6.c

Answer 593

B) The sales assistant must be a fully qualified municipal securities representative. An associated person of a broker-dealer who accepts orders from customers must be registered as a municipal securities representative.

Answer 594

C) the dealer's current return on equity. A municipal securities firm is not required to quote only the security's fair market value. As long as the quote has a reasonable relationship to the fair market value, the quote may take into account other factors, such as the firm's current inventory position (both overall and in the security) and the firm's estimate of the direction of the security's price. A quote may not be based on the dealer's profitability return or on equity.

Answer 595

B) 30 days Explanation Your firm is obligated to identify two emergency contact persons. This is done through the FINRA Contact System. In addition, you must update contact information promptly, but no later than 30 days following any change. Your firm is obligated to review the contact information within 17 business days after the end of each calendar year. Emergency contact persons must be an associated person (AP) of the firm, and at least one emergency contact person must be a member of senior management and a registered principal of the firm. If your firm designates a second emergency contact person who is not a principal, then that contact person must be a member of senior management who is knowledgeable of the firm's operations. If your firm has only one AP, the second emergency contact must be an individual, either registered with another firm or nonregistered, who has knowledge of your firm's operations, such as the firm's attorney, accountant, or clearing firm contact person.

Answer 596

A) Distribution of the handbook is prohibited. Explanation Registered representatives may not suggest that they authored investment-related books, articles, et cetera, if they did not write them. A representative implying authorship of a book on senior investing, and by so doing causing people to believe he was an expert, could violate a number of rules.

Answer 597

A) acceptable, provided the content was approved by an authorized principal of the firm and a record is maintained Explanation Although content on the member firm's website is compliant, signifying that it was approved by an authorized principal and reviewed by FINRA examiners, and the fact that selections were lifted from the site to support another site operated by a registered person would require additional approvals and trip the recordkeeping requirement as well. Subject to approvals from the firm, this is an acceptable activity within FINRA rules. Individual member firms may take a stricter stance.

Answer 598

B) Semiannually Explanation Under the Investment Company Act of 1940, mutual funds must provide semiannual and annual reports to shareholders.

Answer 599

C) The felony conviction is a statutory disqualification and 10 years must elapse before the person may re-enter the securities industry. However, due to the nature of the crime not appearing to pose a threat to the securities industry, an application may be made by a sponsoring firm to permit the person to register. Explanation The definition of statutory disqualification was amended many years ago to include nonsecurities-related felonies. As a result, the Commission permits persons who are living with that burden to find relief from the 10-year ban applicable to a statutory disqualification for committed offenses unrelated to the securities industry (e.g., driving under the influence) by applying with FINRA using a form called MC-400. The determination as to who is granted relief and permitted to enter or re-enter the securities business is made on a case-by-case basis. In the case of driving while intoxicated, and nothing else, history has shown that the SEC and FINRA would grant the petition to register. LO 1.f

Answer 600

C) Promotes the benefits of day trading and rapid-fire trades Explanation A member is not deemed to be promoting a day-trading strategy by engaging solely in promoting efficient execution services or lower execution costs based on multiple trades; providing general investment research or advertising the high quality or prompt availability of such general research; and having a website that provides general financial information or news or that allows the multiple entry of intra-day purchases and sales of the same securities.

Answer 601

B) The firm must register with the SEC only. Explanation If an advisory firm is an adviser to a registered investment company, it is required to register with the Commission, regardless of the amount of AUM.

Answer 602

D) The gift is not permissible. Explanation The gift is limited to $100 per person, per year, and that gift cannot be structured on the basis of so much per trade. A log of gifts should be maintained by the firm's compliance department.

Answer 603

I. A municipal principal (Series 53) II. A municipal sales principal (Series 10) Explanation Discretionary accounts may be reviewed by either a municipal principal or municipal sales principal and must be reviewed frequently.

Answer 604

D)acting in a clerical or ministerial role. Explanation Those people filling solely clerical or ministerial jobs at a broker-dealer are not APs. They do not have to be registered. Note, however, that if a clerk is involved with handling the firm's original books and records, it would be wise for the firm to submit fingerprint cards for that person. This is done by filing Form NRF (Nonregistered, fingerprinted) through the Web CRD and them submitting the actual prints.

Answer 605

D) once the information has become public. Explanation Information obtained in a fiduciary capacity may only be used with the consent of the party for whom the broker-dealer was working as a fiduciary, and through which capacity the information was obtained. An information barrier must be in force. Analysts and underwriters work on opposite sides of the wall. Material, nonpublic information must not be used. Once the information is disclosed publicly, however, it may be used.

Answer 606

C) suggest that the concerned spouse request that no holdings be moved or transferred without the knowledge and written approval of both parties. Explanation To protect a joint investment account or other holdings where divorce proceedings are about to be undertaken, it would be prudent for one of the account holders to promptly contact the broker in writing of the impending divorce. Also, one of the account holders should request that no securities or funds be moved or transferred without the knowledge and written approval of both parties. LO 5.e

Answer 607

D) A stop payment should be placed on the check and a new check should be issued to the customer in the proper amount. Explanation The customer is not entitled to keep the overpayment. Price is obligated to return the extra $5,000. At this point, the best way to handle it is to stop payment on the check and issue the customer a replacement check for the proper amount. If the check had cleared, the customer should be asked to present a check to the member firm for the money owed. If the customer does not comply, the case would be elevated to the firm's legal department. If there is no satisfaction, it could work its way to arbitration, which would be as far as it would go.Explanation The customer is not entitled to keep the overpayment. Price is obligated to return the extra $5,000. At this point, the best way to handle it is to stop payment on the check and issue the customer a replacement check for the proper amount. If the check had cleared, the customer should be asked to present a check to the member firm for the money owed. If the customer does not comply, the case would be elevated to the firm's legal department. If there is no satisfaction, it could work its way to arbitration, which would be as far as it would go.

Answer 608

D) That her firm was a manager or co-manager of any offering of that issuer within the last 12 months Explanation Retail communications that include a recommendation of securities must have a reasonable basis for the recommendation and must disclose, if applicable, that the member was manager or co-manager of a public offering of any securities of the issuer whose securities are recommended within the past 12 months. If at the time the communication was published or distributed the member makes a market in the security being recommended, that would also need to be disclosed. There is no need to disclose if the firm is no longer making a market in the security.

Answer 609

D) the SRO Explanation Time extensions may be permitted by the appropriate self-regulatory authority for good cause.

Answer 610

D) violation of another state’s securities law within the previous five years. Explanation Statutory disqualification would be put into place if the representative was convicted of a securities-related misdemeanor or any felony within the past 10 years. If the representative was convicted over 10 years ago, there is no longer a statutory disqualification even though the state securities commissioner could still deny the registration. However, being charged with a felony means nothing unless the charge was followed by a conviction. A non-securities-related misdemeanor (e.g., a traffic ticket) will not create a statutory disqualification.

Answer 611

B) 55 business days Explanation Amended (March 17, 2022) FINRA Rule 2165 permits firms to place a temporary hold (55 business days) on disbursements from the accounts of individuals aged 65 or older; and individuals aged 18 or older whom firms reasonably believe have an impairment that prevents them from protecting their own interests (a specified adult). Firms are now permitted to place a temporary hold on funds if the firm has a reasonable belief that financial exploitation of the specified adult has or is occurring or was attempted. This gives the firm time to notify a trusted contact person and to begin an internal review.

Answer 612

C) The rep must notify the member firm prior to forming the LLC Explanation No registered person may take on outside employment, including being a sole proprietor, or partner of another person, or being compensated, or having the reasonable expectation of compensation, as a result of any business activity outside the relationship with her member firm, unless she has provided prior written notice to the member.

Answer 613

B) Restricted securities, once sold, are immediately registered for public resale Explanation In a PIPE (Private Investment in Public Equity) transaction, investors purchase securities directly from a publicly traded issuer in a private placement. The securities are restricted and cannot be immediately resold. After the closing of this transaction, the issuer immediately prepares and files a registration statement with the SEC for the securities issued in the PIPE. Once effective, public resale of the PIPE securities may begin.

Answer 614

10 business days The SEC is authorized under federal law to suspend trading in any stock for a period of up to 10 business days. The Commission issues a suspension when the investing public may be at risk, such as when a company fails to keep up with filing its 10-Ks, 8-Ks, et cetera. Once the SEC decides to suspend trading, it will issue an order of suspension and announce the reasons and dates.

Answer 615

C) The gift is not subject to the restrictions of the FINRA gifts rule or its recordkeeping requirements. Explanation A wedding gift or congratulatory gift for the birth of a child or a gift for other infrequent life events is not subject to the restrictions of the gifts rule or its recordkeeping requirements so long as the gift is customary, reasonable, and personal.

Answer 616

B) open the account, accept a deposit, and invest per the customer's instructions. Explanation SEC rules require that we verify a customer's identity within a reasonable time period before or after account opening. Therefore, the account may be opened, and investments made.

Answer 617

C) 120 days Explanation All registered persons must satisfy the Regulatory Element of the Continuing Education Program within 120 days of the person's initial registration date (also known as the base date) following the second registration anniversary, and every three years after that. Failure to complete it within that 120-day window would put the AP's license on inactive status—not suspension. While on inactive status, that person cannot perform any duties in any capacity requiring registration or receive any compensation for the purchase and sale of securities.