UNIT 05.02-002 Flashcards
FINRA encourages attempting to settle disputes by mediation before arbitration because
it is a reasonable and inexpensive step.
FINRA sees mediation as a reasonable and inexpensive process and encourages firms to try it before arbitration.
After a FINRA audit, if the Department of Enforcement issues a formal complaint against a member firm for alleged violations of federal securities law, the matter will be dealt with under
the Code of Procedure.
Trade practice complaints, including alleged violations of federal securities laws, are handled under the Code of Procedure.
The Code of Procedure contains requirements for
handling violations of the Conduct Rules.
The Code of Procedure contains the requirements for handling violations of the Conduct Rules.
When a registered representative receives a complaint the first step should be which of the following?
Forward the complaint to a firm principal
Complaints should be forwarded to a firm principal immediately. A representative should not try to resolve the issue, nor should they delay forwarding the complaint.
During a period of suspension, a member must
be treated as a nonmember by other members.
A suspended member is considered a nonmember firm while the suspension is in effect. Any firm that is not a member (for any reason) must not be granted any of the rights or privileges of FINRA membership.
FINRA may take which of the following actions against members who violate the Conduct Rules?
Censure
Suspension
Members or employees of members found to violate the Conduct Rules can be subjected to expulsion, censure, fine, or suspension. FINRA, other SROs, and the SEC do not have the authority to arrest, indict, convict, or impose a prison sentence.
The Code of Procedure (COP)
handles trade practice complaints regarding violations of the Conduct Rules.
The Code of Procedure is followed when handling trade practice complaints involving violations of the Conduct Rules.
Prior to arbitration, FINRA requests that firms attempt to resolve a dispute through
mediation.
Mediation is the process prior to arbitration. There is no such thing as mendation. Tribulation is a bad time.
A dispute arises between two FINRA member firms over unpaid commissions in the amount of $35,000. This dispute would be handled by
simplified industry arbitration.
Simplified industry arbitration is used in disputes between member firms or their associated persons when the amount in dispute does not exceed $50,000. If the dispute involves a customer, then it goes to simplified arbitration. MRV and AWC are used for Code of Procedure violations, not disputes.
Under the Code of Arbitration Procedure, how much time does a client have to submit a claim against a registered representative or member firm?
6 years
Under the Code of Arbitration Procedure, a dispute or claim is eligible for submission to arbitration up to 6 years after the date of the dispute’s occurrence.
