Series 24 More Questions Flashcards
What supervision can investment bankers provide to research analysts?
None. They cannot supervise them nor approve research reports.
Who sets the exdate?
FINRA
Unit Trusts are not filed with
Corporate Financing Department
Shelf registration for WKSI is effective when and updated how often?
Effective immediately;updated every 2 years
ACT is not an execution system. It includes what 3 things?
1) public report on last sale info 2) equity securities traded OTC; 3) monitor and review trades
If the member is a market maker is required disclosure for _____ but is not required on what?
It is not required on order tickets but is required on confirmations
What is the Manning Rule related to?
limit order protection
SIPC insures up to what?
$500,000 per separate customer. An account for John; and account for Lynne; and an account for Lynne & John are considered three separate customers for the purposes of SIPC
Who does the DMM work for?
the member firm
Call loan have what kind of interest?
fluctuating
What is a booster shot?
A research report issued on or around the expiration date of the lock up period.
Subordinated loan agreements must be filed when?
30 days before effective date
For tenders, what is unique about long positions?
You can only tender net long positions
What is not reported to the consolidated tape?
NASDAQ
What is the minimum margin requirment?
$2,000
What is the benefit to the customer of a margin portfolio account?
less maintenance requirements
Who’s signature is not required on the account application?
The RR’s signature is not required. Only the Series 24 principal.
Reg S is related to what?
US Issuers to non US citizens
What is the requirement for approval of a brochure sent to 25 banking customers?
No approval required since it is sent to institutional customers
A public appearances required what kind of disclosure?
blanket disclosure each quarter
What results in statutory disqualification of an RR?
felontyof any kind
Level I on NASDAQ shows only what to the reps?
the best rate
Level II on NASDAQ is for whom?
traders who see all quotes
Level III is for whom?
market makers
Member firms can contract with a non member on what kind of underwriting
nonconvertible bonds
During a cooling off period for an IPO a member can recommend non convertible securities of the issuer. True or false
true
what is the formula for calculating interest?
Trade Date + Settlement = Settlement Date; Settlement Date - Last Interest Payment = M + D (Mx30)
Draw Chart for Prospectus Delivery Dates for Exchange listed and Non Exchange Listed IP) and APO
Exchange - Non Exchange
IPO 25 90
APO n/a 45
Exdate Determination - Anagram
DERP - delaration; exdate; record date; pay on date
How often are trial balances prepared?
monthly
What are the contribution limits for Roth IRA?
$6000 annually in after-tax income
The holding period for restricted stock under Rule 144 does not apply to what kind of stock?
unregistered; for private placements; stock options, etc
A transaction in a TRACE eligible bond is made at 6>25 p.m. When does it have to be reported?
By 8:15 a.m. the next day - within 15 minutes of opening on the following business day
What are the open hours for the TRACE reporting system?
8:00 a.m. to 6:30 p.m.
IRA rollover period is how many days?
60
Form 147 must be filed with the SEC how many business days before the effective date?
10
All shares in a Rule 147 offering must be what kind of shares?
primary shares
Which IRA allows contributions after age 70 1/2?
Roth
To be eligible to open a portfolio margin account, a customer must have been approved to write what kind of options?
uncovered options
For trades executed during normal hours, how many seconds to cancel a trade?
30
If a company wishes to delist from an exchange, who’s approval is required?
board of directors
TRACE reports corporate bond trades who quickly to the public?
Immediately
Can sales literature be used in a Reg A offering?
Yes
If your independent accountant is terminated, how far back do you go to review disputes?
24 months
Which 529 plans are not tax deductible and distributions are tax free?
Coverdell
what is a principal cross?
When a MM buys at 38.80 and simultaneously sells at 38.80 to another customer charging the same mark up and markdown
Under ACT rules if a MM executes a transaction that exceeds the single trade limit of $1 million, how much time does the clearing broker have to accept the trade?
15
A risk disclosure statement must be given to customer who are day trades if what?
the firm promotes a day trading strategy
Portfolio margin accounts provides what added benefit?
lower margin requirements
What is the dollar amount of an sanction for FINRA to report it to the public?
10,000
SARs (suspicious activity reports) must be kept for how many years?
5
Under FINRA rules, a list of borrowable securities maintained by a member must be updated how often?
daily
A SARs report is what dollar amount?
$5,000
What requires prior approval?
advertising, sales literature and independently prepared reprints; and correspondence to 25 ore more prospective customers in a 30 day period
Correspondence to less than 25 prospects or ordinary communication with customers require what type of approval?
Prior or post review
Disciplined firms: how many reps can a firm have without having to record calls?
if the firm has less than 4 FC; none can be from a disciplined firm; 5 to 9 = 1; 10 to 19 = 4; 20+ = 20%
What is NOT INCLUDED under the 5% policy?
registered secondary offerings
Stabilizing bids require what?
1) be in the prospectus; be in at-the market offerings; 3) best efforts underwriting
If there is a trading halt, what happens to market close orders?
They are cancelled
If part of an issue remains unsold, who has responsibility for the loss?
the underwriting firms
Seller’s option delivery can be no sooner than how many days?
4; otherwise there would be no reason since regular way is 3 days
If a company is making a tender offer to buy ABC stock, what kind of ABC stock can be purchased in the open market at the same time?
straight debt
A deficiency letter means what?
the preliminary prospectus needs to be modified
A Red offering, Rule 504, deals with the sale of securities not exceeding what dollar amount?
$ 1million
Reg D offerings are what kind of transactions?
exempt
Rule 504 of Reg D deals with private placements in which the dollar amount is less than what?
$1 million
Rule 505 of Reg D deals with private placements between what dollar amounts?
does not exceed $ 5 million
Rule 506 of Reg D deals with private placements of what dollar amount?
more than $5 million - no limit
A customer is long 500 shares of ABC stock in cash and short 200 shares of the same stock in a margin account. If the customer wants to sell the 500 shares in the case account, the order ticket must be markerd as what?
sell 300 long; sell 200 short; if the customer is long and short in the same security, they are only long to the extent of the net shares. So the customer has a net long position of 300 shares to sell long + the 200 to sell short
A NASDAQ market maker wasnt to make a market in another issue. How many days does the request need to be submitted to be included in the previous registration?
5 business days
What two things must be included in the selling group agreement?
1) liability for unsold securities 2) to whom concessions will be allowed
Do Not Call lists must be honored for a period of how many years?
5
what is the .t modifier?
effected outside the normal market hours
Public appearances require a blanket certification for all appearances made for what period of time?
quarter
Report alleged violations to SEC or FINRA?
FINRA
Contribution rules?
$250 per ELECTION if you are eligible to vote in that election
Mergers must be reported to FINRA within how many days?
30
What is exempt from reporting requirement of outside business activities? give an example
Passive investments such as owning a rental property from which the RR receives income
IF a stock is delisted from NASDAQ, a MM in the stock can immediately become a BB MM if the MM made a continuous market in the stock during the past how many days?
30
All non exempt securities including rights and warrants must be registered with who prior to the sale?
SEC
Communication with the public in considered what kind of rule?
conduct rule
Notification of a sale under Reg A in the form of an offering circular must be filed with the SEC how many calendar days before?
20
Reports of sales made pursuant to Reg A must be filed with the SEC how often?
every 6 months following the original offerings
Subordinated loan agreements must be filed with FINRA how many days prior to the effective date?
30
Generally, all blotters and records are required to be held for how many years?
6
How long are manuals required to be kept how many years after termination of use?
3
A rescission made by a b/d must be accepted or rejected by the customer within how many days?
30
Members must immediately file a notice with FINRA regarding a complaint against an RR if settled for what dollar amount?
$20,000
A member must immediately file a notice to FINRA regarding a complaint against the member if settled for what dollar amount?
$30,000
Manning Rule applies to what kind of orders?
limit orders
SEC can suspend trading on any exchange for up to how many days?
90
Issuer directed sales are permitted only if what?
the persons to whom the new issue is sold are not restricted?
Standby purchases are locked up for how many months?
3
At maturity, equity linked notes convert to what?
cash
Simplified arbitration is available for claims of what dollar amount or less?
$50,000
What is the statute of limitations according to the code of arbitration?
6 years
In a Reg A offering, the SEC will integrate the current offerings with any security offering of the issuer occurring within the prior how many months?
12
what orders are reduced on the ex-date for the cash dividends?
buy limits & sell stops
An established member firms discovers it A:I ratio is more than 12:1. When is notice required?
within 24 hours
An established firm discovers its A:I ratio is more than 12:1. How is noticed required to be delivered?
electronically
Limit order protection rules are in effect during what hours?
normal business hours and extended trading hours
FINRA cannot initiate a trading halt for what kind of securities?
listed stocks trading on an exchange
Under Reg SHO, securities that have large open short positions at a registered clearning agency are termed what?
threshhold securities
Advertisements does not have to be pre-filed for what type of securities?
DPPs
A b/d from time to time enters order through a firm other than its clearing agency. what is this called?
a give up relationship
Is a website considered advertising?
yes
Is communication on an electronic bulletin considered advertising?
yes
Is conversation in an online chat room considered advertising?
no
To voluntarily withdraw from NASDAQ a firm only has to what?
withdraw its quotes
Any stock listed on an exchange or NASDAQ is or is not considered a penny stock regardless of price?
Is not. Ex; Synovus below $5
A firm that wishes to become a MM in a BB stock may avoid filing Form 211 by what?
piggybacking is the stock is deemed active
A P modifier next to a market maker’s identifier means what?
primary market maker
Three things about quotes on the OTC BB.
1) unpriced indications or interest are allowed 2) foreign securities may be quoted 3) quotes must be firm
To register as a MM for the sole purpose of acquiring stock in a 144 transaction as a principal is prohibited. True or False
True
Control stock is always subject to what kind of restrictions?
volume restrictions
To sell restricted stock under Rule 144, what two things must be in place?
1) adequate information about the issuer must be available 2) the stock must be fully paid
Mutual funds 12-b1 plans are reviewed how often?
quarterly
Accrued interest is added to the buyer or the seller?
both
The determination of a broker/dealer’s financial failure is made under the provisions of what?
Securities Investor Protection Act of 1970
Is 10 day notice of shareholder meetings required?
no
A research analyst can meet with investment banking personnel to discuss a report if what?
it must be in the presence of a legal or compliance officer
What is not included on the customer credit agreement?
a stated rate of interest
A form 13- D is required when?
when an unaffiliated entity acquires 5% or more interest in an issuer
The use of sales literature in a Reg A offering must be accompanied by what?
an offering circular
The minimum net capital requirement for a carrying firm (clearing firm) is what
$250,000
Form 144 does not have to be filed by an affiliate if the amount to be sold in any 90-day period is less that what?
5,000 shares or less or $50,000 or less
What is the purpose of the Corporate Financing Department?
to review the fairness of compensation to underwriters
What securities are subject to CFD?
equities and convertible debt
What securities are exempt from CFD?
non convertible preferred stock and non convertible debt
In questions related to haircuts, If any single nonexempt security in inventory (long or short) exceeds 10% of tentative net capital, an additional haircut at what rate must be taken on the amount the position exceeds the 10% threshold. This rule does NOT apply to exempt securities.
15%
Fidelity bond is 120% of what?
the highest net capital requirement in the previous 12 months
When an RR opens an account at another broker dealer, the employing firm must be notified before what?
any transaction
Securities purchased in a standby offer must be held for how long?
3 months
Investment advisers must be federally registered if the amount of assets under management is at least
$110 million
How often do you have to review supervising branches and RRs?
at least annually
If a market maker’s bid or offer is decremented to zero, and the firm is not using Automatic Quote Refresh, the firm must update its quote and size within how many seconds?
30
Do employee recruitment ads need approval?
no
Long market value at maintenance is the market value to which the securities could fall that would put the account at minimum maintenance (25% of market value). The quickest way to make the computation is to divide the debit balance by 0.75. In this example, dividing $16,800 by 0.75 results in a maintenance market value of $22,400.
divide the debit balance by .75
In an active, competitive market, markups and markdowns are computed from the inside market at what time?
at the time of the transaction
If a market maker acts as an investment adviser, the Investment Advisers Act of 1940 requires that all transactions in stocks in which it makes a market be effected
agency
Due to IRS regulations, a priced bid or offer for a what is never firm?
DPP
The NSDQ identifier is used for what kinds of orders? attributable or non attributable
non attributable
Tell me two things about the PInks in regard to the stocks that trade on it.
They may not meet listing requirements for Nasdaq.
They may trade very infrequently.
What does reg FD cover?
Regulation FD was enacted to curb the selective disclosure of material nonpublic information by issuers to financial analysts and institutional investors.
Under Regulation D, Rule 504 offerings deal with a sale of securities
not exceed $ 1 million
Repurchase agreements negotiated with customers who have purchased nonexempt securities are
prohibited
A registered representative at a limited business broker/dealer can purchase a new issue at the POP because why?
because a limited business b/d can only trade in mutuals, variables and DPPs
The term offering at the market refers to a distribution in which the price to the public on the offering date is set
more than once per day
Who does not have to file with the CFD?
unit trusts
What is not entered into Nasdas?
unpreferenced orders
Fictional names or DBA must be filed with whom?
FINRA and SEC
The 5% policy does not apply to what?
spreads in a new issue
partnership roll-up refers to
converting an illiquid partnership interest into a more marketable security
Under ACT rules, clearing brokers must accept or decline a single trade, executed by a correspondent market maker exceeding the single trade limit, within how many minutes of execution?
15
In a dispute between a member firm and an associated person over the terms of an employment contract in which the amount in controversy exceeds $100,000, the arbitration panel will consist of
2 public arbitrators and one nonpublic arbitrator
An unregistered employee of a NYSE member firm has been indicted for alleged violations of the Act of 1934. As branch manager, you should
Report to FINRA
A customer opens an account with XYZ Discount Securities and signs a loan consent agreement. The member firm is now permitted to
lend the customer’s marginable securities
Under Rule 101 of Regulation M, securities which are not actively traded but have an ADTV of at least $100,000 and a public float of $25 million or more are subject to a restricted period of
1 day
In dominated and controlled trading markets, markup is computed based on
contemporaneous costs
Accrued interest is added to the buyer or seller?
both
For interdealer trades that are settled ex-clearing, paper confirmations must be sent
no later than T+1
Your firm is the sole market maker in WXYZ common stock. At month’s end, the stock in your firm’s trading account is valued at $300,000. For net capital purposes, the value of your inventory is
0
The OTCBB will display an inside market for a stock as long as there is (are) at least
2 market makers displaying firm 2-sided quotes
Payment for order flow is noted on the customer confirmation. Is it also on the order ticket?
no
single offer to a nonresident would destroy the exemption provided by
Rule 147
All of the following are responsibilities of Nasdaq’s StockWatch Department EXCEPT
hearing appeals of a Nasdaq decision regarding a clearly erroneous trade
Under Nasdaq trading rules, a pegged order to buy
tracks the inside bid. and is a limit order
Which of the following describes findings under the Code of Arbitration?
Binding on all parties involved in a dispute
Under the net capital rule, which of the following are considered allowable capital?
Common stocka nd Subordinated loans.
The letter of intent initiates the underwriting process and is signed by
the issuer and managing underwriter.
Which of the following statements regarding the OTCBB are TRUE?
There are no formal listing standards for inclusion on the OTCBB. In addition, issuers must be current in their regulatory filings in order to remain on the Bulletin Board.
If a full-service broker/dealer has been found to have violated numerous MSRB rules, a fine will be assessed by who and paid to whom
FINRA and paid to FINRA
One of the representatives in your firm has prepared and wishes to send a letter to all of his clients, about 50 in all, describing a strategy he believes is appropriate given recent market turbulence. Which statement is true?
Approval by a principal is required in advance of first use.
What is a secondary offering?
When one or more major stockholders in the corp are selling all or a major portion of their holdings.
