Supervision Of BD And Personal Management Flashcards
Members must file notice with finra to report securities or commodity related judgements of more than….
15,000 for individuals
25,000 against member firms
Advertising for municipal securities can be approved by…
Series 24 or Series 53 principals
Felony charges and convictions must be reported for how many years?
They are reported forever
How are FINRA fees assessed?
Number of RRs and Principals associated with the member
Number of branch offices registered with FINRA
Assessments are based on revenue (net of certain costs) from securities transactions
FINRA Rule 4530
Demands the member firms promptly report violation of federal securities laws, customer complaints, suspension or expulsion by another SRO, indictment, conviction, guilty plea, or serious disciplinary action within 30 days
Form MC-400
Required when a member firm is requesting of FINRA to employ, not terminate, an individual
How long must an associated person wait to take an exam after failing?
30 days after first fail.
After 3 or more times, 180 days before sitting for the fourth time. Fifth and sixth have same 180 day waiting period
What has the authority to approve a statutorily disqualified person’s application to become or remain associated with a member firm in a purely clerical sense
Department of member regulation
After what duration of a leave of absence must a RR requalify through examination
2 years
Are all branch managers registered as principals?
Nope
What are the requirements of Form U-4
10 years of employment
5 years of residency
What does the series 6 license allow you to do?
Offer investment company securities register under the 1940 act sold my prospectus
How long is a convicted felon banned from the securities business
10 years
What are the requirements for the regulatory element of an RRs licensing?
Completed within 120 days of the person’s second registration anniversary.
Completed every 3 years thereafter
What are the requirements to exclude a primary residence from being designated as a branch?
Vacation home?
The associated person may not meet with clients at this location.
The vacation homes is used for less than 30 business days in a calendar year
What are the inspection / review requirements for OSJs, RRs, and Non-supervising branches?
OSJs must be inspected annually
RR must have an annual compliance review
Non-supervisory branches must be inspected at lease once every 3 years
What are the requirements for verbal complaints?
These must be addressed promptly, but no formal action is required
What is a member firm’s responsibility for Form U-5 after a RR leaves the firm
File it within 30 days and provide the RR with a copay
How long must an OSJ maintain a file of customer complaints
Four years
What is not included in the definition of a branch office?
What is a location of convenience?
Any location used primary for non-securities business and from which less than 25 securities transactions are affected annually.
A location of convenience (coffee shop, library) is any location used occasionally and by appointment.
When is a firm subject to the taping rule?
For firms that fall under this rule, how long do they have to comply?
More than 20 registered reps
More than 20% of RRs have been employed by disciplined firms with the past 3 years
A firm has 60 days to secure equipment and begin recording after being notified
How often must reports to FINRA’s telemarketing supervision be made?
Quarterly
What are the licensing requirements for the manager of an OSJ?
Register as a General Securities Sale Supervisor (Series 10) or another principal (Series 24) as appropriate to the business lines undertaken at the branch
What are the review requirements for customer accounts and discretionary accounts
Customer accounts must be reviewed periodically
Discretionary accounts must be reviewed frequently
Conduct rules for gift giving - member firm to member firm
$100 cap on an annual basis.
Wedding gifts / birth of a child
Wedding gifts and congratulatory gifts for the birth of child are not subject to the restrictions of the gifts rule or its record keeping requirements so long as the gift is customary, reasonable, and personal in nature.
What are the accounts that do not require employing member firm approval prior to establishing them at other firms
Unit investment trusts
Municipal fund securities
Qualified tuition programs
Variable contracts or redeemable securities of companies registered under the 40 act
How long must customer complaints be held on file
Written customer complaints and any correspondence related to the complaints must be held on file for four years
What are the requirements for a RR engaging in a private securities transaction?
Written notification to the member firm prior to the transaction
If being compensated, approval from the member firm is required and must be recorded on the employing members books.
Are passive investments (e.g. limited partnerships) prohibited as an outside business activity?
Passive investments are specifically excluded from notification requirements of the outside business activity rule.
Prior written notification to the employing FINRA member firm is required if the RR is to be employed by, or accepts confirmation from, an entity other than their employer.
How long does a respondent have to respond to a complaint?
25 days. If no response is received, the department of enforcement will send a second notice requiring a response within 14 days
Can a member firm terminate a RR who is under investigation?
No. The member may not terminate the RR until the investigation is complete. The firm may suspend the member during the investigation.
When do Department of Enforcement findings other than barring and expulsion become final?
30 days after the written decision.
Appeals must be made within 25 days fo the decision date.
Barring and expulsion take effect immediately
What type of claims are available for simplified arbitration?
Available for claims of less than 50,000
Statute of limitations is 6 years from the event giving rise to the claim.
What is the composition arbitration panels for claims between member firms and associated persons that exceed $100,000
Panel of 3 arbitrators, 1 of which is non-public
How long do parties have to make payment once a code of arbitration decision is made?
30 days
What is the difference between the code of procedure and the code of arbitration?
Code of procedure is used to deal with violations of conduct rules
Code of arbitration is used to settle disputes.
Adverse decisions and penalties under COP are appeal to National Adjudicatory Council, then SEC
Settlements under arbitration are not subject to appeal, and mediation is not mandatory.
Can FINRA terminate the employment of an RR
No - only a member firm can terminate employement
How long does a firm have to respond to a client requesting a copy of the predispute arbitration agreement
10 business days
What types of claims are not subject to arbitration?
Employment discrimination and sexual harassment claims are not required to be arbitrated
Under the code of arbitration, how long is a dispute or claim eligible for submission after the date of the dispute’s occurrence?
6 years
Does a suspended associated person receive compensation?
No - the member firm is prohibited from paying salary, commission, or other remuneration that the personal might have earned during the suspension period.
Under the Code of Procedure, what is the maximum fine for minor rule violation?
$2,500
What type of information does FINRA release to the public in respect to disciplinary actions?
Suspension, cancellation or expulsion of a member
Suspension or revocation of an associated person’s registration
Suspension or barring of an associated person
Monetary sanctions > $15,000
What does FINRA require for the CCO role?
Identify a CCO
CCO prepares annual report detailing the processes the BD has in place to establish, test, and modify WSPs reasonably designed to achieve compliance
CEO certifies this report and holds meeting with CCO
Report must be submitted to member firms board and audit committee the earlier of next scheduled meeting or 45 days of the date of execution
