Unit 12: Joining and Leaving a Member Firm and OngoingExpectations Flashcards
In order to become associated with a member firm, a ____ is filed by the member firm with FINRA
In a similar way, when terminating the relationship, the firm files a ____.
Form U4
Form U5
Form U4 is includes:
name, address, and any aliases;
5-year residency history;
10-year employment history;
information on any charges or convictions relating to the investment business; and
a required detailed explanation for an affirmative answer (yes) to any of the questions regarding charges, or convictions. This information must be provided on the Disclosure Reporting Pages (DRP) on Form U4.
what is not included on the Fornm U4?
Information on marital status or educational background (e.g., degrees obtained) is not required on Form U4. However, within the 10-year employment history required on Form U4. full-time education is included.
The U4 is not a _____ filing.
one-time
If a registered person separates from one firm and joins a different firm, a new U4 must be completed
There are very few requirements for filling out Form U4. There is no education requirement and not even a requirement that a representative be a U.S. citizen. There are two requirements to remember:
Sponsorship by a broker-dealer (BD) member firm is required.
Complete and truthful disclosure is required on all required forms.
Registered BDs must have _____ made for most of their employees, and all directors, officers, and partners must submit thoseto the U.S. attorney general (Justice Department) for identification and processing.
fingerprint records
Should a person registered with a member resign or be terminated, the member must file ____ with the CRD within 30 days of the termination date.
Form U5
There are five reasons listed for termination on the form:
Discharged
Permitted to resign
Deceased
Voluntary
Other
If the member checks discharged, permitted to resign, or other, all the details surrounding the termination must be ____.
disclosed
After a Form US for a full termination is filed, FINRA and other regulators retain jurisdiction for ____.
two years
Passing the SIE exam allows for a person to take a top-off exam and affiliate with a member firm for up to ___ years without retaking the SIE.
four
If a representative leaves the industry for regular military service, that person’s license is placed in a special inactive status.This status continues until _____ after leaving military service.
90 days
2 types of Statutory Disqualification
Rejection of application
automatic disqualification
An individual applying for registration as an associated person will be rejected if she:
- has been or is expelled or suspended from membership or participation in any other SRO or from the foreign equivalent of an SRO;
- si under an SEC order or an order of a foreign financial regulator denying, suspending, or revoking his registration or barring him from association with a BD; or
- has been found to be the cause of another BD or associated person being expelled or suspended by another SRO, the SEC, or a foreign equivalent of an SRO.
The following also can automatically disqualify an applicant for registration:
Misstatements willfully made in an application for membership or registration as an associated person
A felony conviction, either domestic or foreign, or a misdemeanor conviction involving securities or money within the past 10 years
Court injunctions prohibiting the individual from acting as an investment adviser, an
underwriter, or a BD or in other capacities aligned with the securities and financial services industry
While a _____ or a _____ does not disqualify one from registering, failure to disclose the facts would.
bankruptcy or unsatisfied lien
Which of the reasons for termination from Form U5 do not require a detailed explanation?
IDischarged
iiPermitted to resign
iiiDeceased
ivVoluntary
A. landIl
B. lIandIlI .
C IllandIV
D. I,ll,andV
C IllandIV
How soon after termination must Form U5 be filed with the CRD?
A. 60days
B. 9 0 d a y s
C. 30days
D. 120days
C. 30days
FINRA retains regulatory jurisdiction for how long after a registered person terminates association with a member firm?
A. 2vears
B. 120 days
C. 1 y e a r
D. 90davs
2 years
As a means of protecting the integrity of the industry and protecting the investing public, associated persons of FINRA member firms must submit fingerprint records to
A. the U.S. attorney general
B. the attorney general for the state ni which they reside
C.the Securities and Exchange Commission (SEC)
D. the FBI
A. the U.S. attorney general
Anyone who manages or supervises any part of a member’s investment banking or securities business must be registered as a _____ with FINRA (including people involved solely in training associated persons).
principal
Unless the member firm is a sole proprietorship, it must employ at least ____ registered principals.
two
the duties of a principal are the following:
- Accepting new accounts (approving)
- Approving accounts for margin or options trading
Approving or reviewing communications Reviewing trading activity
Hiring and training new representatives - Responding to written complaints (all written complaints go to a principal for action)
A complaint is defined as a _____ by a customer (or a person acting on behalf of a customer) alleging a grievance arising out of, or in connection with, a securities transaction.
written statement
A ____ will need to address the complaint.
principal
Complaint resolution usually entails _____ if mediation does not resolve the complaint
arbitation
Registered persons are required to participate in continuing education (CE) programs.The CE requirement has two components: a ____ and _______.
firm element and a regulatory element
The firm element requires member firms to prepare an ______, taking into account such factors as recent regulatory developments, the scope of the member’s business
activities, the performance ofits personnel in the regulatory element, and its supervisory needs.
annual training plan
The regulatory element requires that al registered persons complete a computer-based training session within _____ of the person’s second registration anniversary and every three years thereafter (i.e., within 120 days of the person’s Sth, 8th, 11th registration anniversary, and
so on
120 days
Outside Business Activities (OBAs) include:
outside Job
Private Securities transactions without compensation
Private securities transations with compensation
If an associated person wishes toenter into aprivate securities transaction, that person must:
- provide prior written notice to her employer;
- describe in detail the proposed transaction;
- describe in detail her proposed role in the transaction; and
- disclose whether she has received or may receive compensation for the transaction.
If the member approves the participation of a private securites transaction with compensation:
it must treat the transaction as if it is being done on its own behalf by entering the transaction on its own books and supervising the associated person during the transaction.
BDs may not distribute business-related compensation (cash or noncash gifts or gratuities) to the employees ofother member firms except:
The compensation is not conditional on sales or promises of sales. It has theemploying member’s prior approval.
‘The compensation’s total value does not exceed the annual limit set by the regulatory bodies (currently $100 per year)
An outside job requires ____ not _____
notification not permission
Political contributions must:
MRSRB G-37 Rule
$250 max per election
Must be able to vote in the election
Political contributions include:
political parties, candidates for office, and elected officials
MSRB Rule G-37 prevents____
pay to play with the influence of political contributions on the selection of underwriters.
The ______ define a private securities transaction as any sale of securities outside
an associated person’s regular business and
his employing member. Private securities transactions are also known as selling away.
Conduct Rules
Regulators retain jurisdiction for a period of ___ from termination. A
2 years
All registered representatives are required to sit for the regulatory element continuing education _____.
every year by December 31
The rules regarding gifts, gratuities, and compensation to another firm’s employees permit _____ noncash expenditures that exceed the $100 limit. These might include dinners, seminars, tickets to entertainment events, or reminder advertising items. However, vacations or season tickets to cultural or sporting events are always violations.
occasional
______ define a private securities transaction, also known as selling away, as any sale of securities outside an associated person’s regular business and her employing member.
The Conduct Rules
Transferring a registration from one member firm to another is not permitted. Should a person resign or be terminated, the member firm must file a Form U5 with the Central Registration Depository (CRD) within ____ of the termination date. A Form U4 must then be filed by the new employer with all of the form’s information requirements met.
30 days
If a political contribution to certain elected officials or candidates is made, an adviser may not provide advisory services to any government the adviser represents for a fee, for a period of ____
two years.
Copies of a new employee’s Form U5 may be obtained from the employee, or from FINRA’s Central Registration Depository (CRD). Whichever the source, the firm must obtain the copy within ____ of filing the new Form U4 for the new employee.
60 days
Passive investments, such as the purchase of a limited partnership interest, _____ considered outside business activity.
are not
An ____ is an associated person of a FINRA member firm engaged in municipal securities underwriting, trading, sales, financial advisory, research, investment advice, or any other activities that involve communication with public investors about municipal bonds.
MFP
Notification is ______ when a private securities transaction takes place with a member of the immediate family of the representative, as long as there is no compensation
not required
Certain persons are exempt from the fingerprinting requirement, including those:
selling only mutual funds, variable annuities, or direct participation programs.
