Test questions Flashcards
Rule 15c2-1 Commingling
Commingled with other customers if consent in writing never commingled with firm securities
Stock Splits
Ex date is 1 bd following pay date
Cash Div
exdate is 1 bd prior to record date
Rule 506b
Limits non accredited investors to 35. excluded from the count relatives if investor in same household anyone classified as accredited investor.
-bus entity or lp where investor owns 50% or more is excluded unless formed solely for purchasing
10b-18
Price paid no more than the greater of highest current independent bid or last reported sale
Reduction of excess SIPC coverage
Notify customers at least 30 days prior
Dat trading risk disclosure
must be given to customers of firms that promote a day trading strategy
OSJ must review accts
Review accts periodically and discretionary accts frequently
SMA
Customer may use balance to buy 2x that amount in securities.
=excess equities=credit line
Can be released provided no maintenance call
REGX
REGt of foreign b/d or reg-u foreign bank
Lending agreements
Ap can lend borrow from customer with written approval/notice
Immediate family
biz of lending
Reg with same firm as rep
personal or biz relationship outside of broker/cust relationship
continuous quote rule
12 bds during 30 day calendar
no more than 4 consecutive days without quotation
OTBB
quotes:
Firm, subj ioi’s one sided and need phone #
Dept of Enforcement
Can censure suspend or expel. no jurisdiction over other SRO’s such as regional exchanges
FocusII, IIa
within 60 days of fiscal year end
SIPC Assessments
based on Gross volumes not by clearing
OTCBB
No formal listing standard but must current in filings
Directed Order
Used to access a particular quote not a specific mm
Posted on the blotter
Receipts and delivery of securities & disbursements of cash must be posted on the blotter the BD following receipt of delivery.
MORC appeal
30 mins
Payments to mutual firms
3bds of trade or 1 bd of receipt whichever is later
Reclamation from BD
is available if member inadvertently accepts a delivery from another member a good but shud have been rejected.
In whole call never subj to reclamation
Needed to open acct
Name, address SS, DOB must verify id within a reasonable amount of time before or after account is open.
If no id WSP’s must describe what to do+ take what ever action is necessary
Rule 2330 Variable annuities
Recommended purchases and exchanges of deferred ( not immediate) variable and initial sub-account allocations
Doesn’t apply to sub-account a reallocations or additions
QIB’s
Pension fund, Bank, Insurance co invest company with Portfolios of $100mm or more. BD’s $10mm or more
Immediate family
Spouse parents, brothers, sisters in laws and children
Aunts and Uncles are excluded
OTCBB additional offering period prospectus
40 days
OTCBB initial offering prospectus
90 days
Nasdaq ipo prospectus
25 days additional no requirements for nyse or nasdaq
Prepayment Subordinated loans
Approval from DEA
Outstanding 1 year
Capital cant fall below 120%
AI:NC
CFD will comp recvd by under writer?
180 days preceding filing
Code of Procedure member can be suspended by whom?
NAC or district hearing panel. SEC can modify affirm penalities
Buying power for day traders is?
4 maintenance margin excess or sma. $25k initial margin
503 Formd
15 days
Maxsize under reg a
$50mm 12 month period
Firm will be prohibited from selling a security as principle & buying as agent for a customer if Fail to deliver is how old?
60 days or older
Client Dies
Death Certificate
Affidavit of domecile
inheritance tax waiver
Power of Atty invalid upon death
FINRA immediate Notification
Books and records not current
D/e is at 80% for 100 days
Early warning is net cap below 120%
ai:nc exceeds 12:1
Properly Signed & Guarrranteed stock or Bond Power
is a document attached to a certificate authorizing transfer of ownership to another party or when a security is hypothecated
intent to transfer ownership or pledging securities as collateral for a loan
Net Capital rule notification within 24 hours
Inadequacy accounting above 12:1 but not above 15:1
Underwriting Compensation
No freely transferable stock (180 days restricted)
any right of refusal right longer than 3yrs
options below POP
Option life longer than 5 years
Complaints filed
quarterly
Finra rules accept decline trade exceeding limits within how long
15 minutes of execution
B/D to prepare trial balances how long
Monthly
Rule 147 how long held
6 months…or resale to a person within that state
Principle must review
Order tickets
retail communications
new account forms
Finra prohibits Investment company secrities from selling below POP unless
the buyer is a member firm, selling agreement in writing and is filling a customer order
OTCBB Eligible
Foreign securities that are SEC registered, DPP, delisted nasdaq, securities on a regional not eligible for consolidated tape
Eastern Account
undivided account which is a shared liability for unsold securities
Blotter pruchase & sale of securities must be posted to a bd blotter…
BD following trade date
Stand by purchase agreement
3 month lockup
syndicate manager must report in writing
disclosed in final prospectus
mediation rules
Both parties agree
Either side may withdraw by written notice
no consent is required
mediator is prohibited from serving as arbitrator
Converms for DVP
no later than t+1
Delivery of street name securities
will always necessitate an inquiry of SIC
SMA
Cash deposits increase dollar for Dollar
fully paid for stock increases 50%
Stock Sale 50% is released
Inspections at a non supervisory Branch
once every 3 years
violation of net capital rule exceeds 70% for more than 90 days…what notification is required
immediate
early warning net cpital
exceeds 12:1 and 120% d/e
What can finra require
Provide info orally writting or electronically.
give testimony under oath
provide access to or copies of books and/or accounts
SIC
Street name always requires inquiry
exception is member to member
Rep letters 5130
Initial verification
positive affirmation annual
negative consent
Stabilization- notice must be given where?
Prospectus and registration statement
Customer orders that improve a MM price or size must be displayed when?
immediately ( within 30 seconds)
SAR is filed when?
within 30 days
Form 3 filed when?
10 days
REGS holding period
1 year or 6 months if reporting
Partnerships are frozen when
Death of GP
FocusIIa
quartely within 17 bds
Excluded from definition of Branch office
Location of convenience
temp location as part of BCP
Back Office
For primary residence to be excluded ap must not meet clients at location
Trailer Commission
12b-1 fee charged by mutual funds RR receives %
Non Directed order
Liability orders creates obligation to buy or sell. Market orders or marketable limit orders
5130 doesnt apply to members new issue employees but does apply to
employees of other member firms
PB min equity is
$500k min net capital is $1.5
When a bd suspects securities are lost & missing it has?
2bds 3rd subsequent bd to report loss to sic & transfer agent
Halts S&P 500
7, 13, 20
What is cxled on reverse split
Open orders above and below market
Forward split shares increased / price decrease
FINRA prohibits repurchase agreements in….
nonexempt securities
Market halt how are regular orders and MOC treated
market limit orders are treated as GTC and held for execution the following day
MOC are cxled
Cost net capital MM’s
$5 and greater is 2500
5 and less 100
Min 100k and max 1mm
12b-1 fees can cover
cost of marketing and compensate sales personnel
rule 147
Stop s\transfer instructions to the agent barring certificate, cancellation & re-issuance in name of any non resident
Legend not registered with sec act of 33
obtain a a written representation of residence
Fairness opinion
Material relationship last 2 years
member receive comp contingent on completion
inform that opinion came from party requesting opinion
acted as financial adviser to transaction
issued or approved by fairness committee
Complaint from dea who long to respond
25 days
Customer complaints kept for how long?
4 years
1940 inv company act the 75/5/ 10 rule
75% invested
5% or less of assets in any one security
10% or less voting stock in any 1 issue
Unit trusts are what
close ended
Municipal trusts are?
diversified in terms of coupon, rating issuer and maturity
what securities are act reported
Converts
CQS securities
BB equities
High yield are reported thru trace
Members cant charge for…
forwarding proxies and for research
TRACE hours
8-6:30 with in 15 minutes of close… then within 15 minutes of open
FINCEN Form 112
10k or greater cash
TRACE who reports?
both parties…buyer and seller
Are margin securities subj to possession or control requirements?
no because they are at a bank collateralizing customer debit balances
.U
trades between midnight and 7:59:59 reported after normal market hours
*K filed when?
4bd’s after an event
Mutual fund Financial statements filed when?
at least semi-annually
Fidelity Bond
highest required net capital over 12 months
TIC dies
Freeze account interest goes to estate
Insider trading penalties
25mm for firms 5mm for natural persons
If customer pays prior to settlement date….
transaction is not complete until securities are delivered into account
Seasoned issuer
must have a public float of $75mm
Stabilizing Bid
Notifiy exchange
penalty free or penalty
copy of prospectus
short covering
Review of securities at a b/d may be risk based
must be able to id & prioritize those trades which pose greatest chance of rule violation
PMM exceeds its net dailly purchase
30% must seek excused withdrawal remaining of the day
b/d does not hold customer funds or securities
it is exempt from reserve requirement
BD has reported an erroneous trade to trf
Nasdaq will issue a written determination
aggrieved party 30 minutes to appeal
nasdaq null, void decline to act or adj trade
When does NASDAQ need to be notified of POP price
by 6:45pm the night before
Adj for divididends
those entered below market
buy limits and sell stops
Form 211 when
3 bds prior to entering quotes
Retails comms must disclose
if was a manager or co-manager of a public offering in security preceding 12 months
Subsidiary ledgers kept for how long
3 years
Sar $ amount threshold?
$5k
Interest corporate bonds
Begins to accrue on prior int payment date upto but including settlement date
Issuers must notify how many days before record date
10 days
DVP close out
35 days
physical delivers are made where?
office of buyer…seller incurs expenses
BD just terminated accountant…who must they notify?
FINRA and SEC within 15 bds
Blotters
Daily purchases & sales
receipts and delivery of securities
distro of cash
as well as id of account for which each trade is effected.
Commissions are not on blotter
Series 27
Fin ops principal
Customer occupation and tax id must be obtained prior
to 2nd sd of initial transaction
AML compliance program approved by whom?
Senior management of firm not required to be a registered individual most be monitored by an ap
Cold calling
8am to 9pm
A short sale effected the day before the ex div date will result
being paid to the buyer
SS occurs on the exdate
the dividend will be paid to the lender
Oats does not include
CRD number
Carrying BD must have physical possession or control of
fully paid and excess margin securities
