Unit 17 Flashcards
All of the following records must be kept for 6 years EXCEPT
A) communications with the public
B) blotters
C) customer account records, like monthly statements
D) the general ledger
communications with the public
Of the answer choices listed, it is important to recognize that communications with the public must be maintained on file for 3 years by a member firm, and therefore, would not fall under the 6-year record retention requirement.
All of the following would be considered nonpublic arbitrators EXCEPT
A) Susan, a corporate vice president working for a tech company listed on the NYSE
B) Grace, a banking executive overseeing lending services
C) Daniel, a mutual fund portfolio advisor for several years before retirement last month
D) Joel, an attorney who frequently represents and solicits clients in disputes concerning investment accounts
Susan, a corporate vice president working for a tech company listed on the NYSE
Nonpublic arbitrators are any persons who have worked in the financial industry for any duration during their careers including persons associated with a mutual fund or a hedge fund, and persons associated with an investment adviser. Additionally, any financial industry professionals who regularly represent or provide services to investor parties in disputes concerning investment accounts or transactions including attorneys and accountants will also be considered non-public arbitrators if the activity has taken place within the past 5 years.
A brokerage firm’s research department has issued a buy recommendation on XYZ Corporation common stock. The report must contain all of the following information EXCEPT:
A) that the firm was the managing underwriter in a recent public offering of the stock.
B) that the firm was part of the selling group in a recent public offering of the stock.
C) that the firm makes a trading market in the stock.
D) that the partners of the firm hold options to purchase the stock.
that the firm was part of the selling group in a recent public offering of the stock.
Disclosure of participation as a selling group member is not required.
If an individual is convicted of a money- or securities-related fraud, FINRA will deny registration to that individual for how many years from the conviction date?
A) 10.
B) 1.
C) 5.
D) 2.
Conviction within the past 10 years for any felony or securities-/money-related misdemeanor will lead to statutory disqualification of an applicant for registration with a FINRA member firm.
Which of the following statements regarding the Code of Arbitration are TRUE?
I.Simplified arbitration is available for claims of $50,000 or less.
II.Simplified arbitration is available for claims of $25,000 or less.
III.The statute of limitations for filing a claim is 3 years from the event.
IV.The statute of limitations for filing a claim is 6 years from the event.
Simplified arbitration is available for claims of $50,000 or less. The statute of limitations for filing a claim is 6 years from the event giving rise to the claim.
Correspondence, one of the three categories of communication with the public, is defined as
A) electronic communications only, that have been made available to 25 or fewer retail investors within the past 6 months
B) written communications only, that have been made available to 25 or fewer retail investors within the past 6 months
C) any written or electronic communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period
D) communications that are targeted only at individuals who currently maintain accounts with the broker dealer
any written or electronic communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period
A customer has filed a serious complaint against your firm and is threatening to take the firm to court. When informed that he has signed a predispute arbitration agreement, he demands to see a copy of it. How long does your firm have to supply the customer with a copy of the signed agreement upon receipt of his request?
7 Business Days
3 Business Days
5 Business Days
10 Business Days
10 business days.
The regulatory element of continuing
A) within 120 days of the 2nd registration anniversary and every 3 years thereafter.
B) within 120 days of the 3rd registration anniversary and every 2 years thereafter.
C) annually.
D) every 3rd year.
within 120 days of the 2nd registration anniversary and every 3 years thereafter.
During a period of suspension, a suspended member must:
A) be treated as a nonmember by other members.
B) restrict its securities activities to mutual funds.
C) have no securities dealings of any kind.
D) restrict its securities activities to investment banking.
be treated as a nonmember by other members.
Each of the following is a category of communications with the public designated by FINRA EXCEPT
A) retail
B) correspondence
C) institutional
D) market letters
Market letters;
The three categories of communications with the public designated by FINRA are retail, correspondence, and institutional. Market letters, as all sales or advertising pieces would, can fall under any of the three communications categories depending on to whom they are sent or made available to, and the number of recipients.
You have just received a statement of claim from the Director of Arbitration. One of your customers is claiming that your failure to follow his instructions led to a loss of $36,000. Under FINRA rules, you must respond within:
A) 60 days.
B) the business day the claim was received.
C) 24 business hours.
D) 45 days.
45 days.
Regarding FINRA spot-checks of a member firm’s communications with the public, which of the following statements is CORRECT?
I.Only written communications are subject to spot-checks.
II.Both written and electronic forms of communication are subject to spot-checks.
III.Upon written request from FINRA, the member must submit the material requested within the time frame specified by FINRA.
IV.Upon written request from FINRA, the member has 10 business days to submit the requested material.
II.Both written and electronic forms of communication are subject to spot-checks
III.Upon written request from FINRA, the member must submit the material requested within the time frame specified by FINRA.
;
Each member’s written and electronic communications may be subject to a spot-check procedure by FINRA. Upon written request from FINRA, each member must submit the material requested within the time frame specified by FINRA.
If a member wishes to appeal an adverse decision in a Code of Procedure hearing, the member first must appeal to the National Adjudicatory Council within how many days of the decision date?
A) 25
B) 30
C) 45
D) 40
If either side is displeased with a Code of Procedure decision, an appeal must be made within 25 days of the decision date.
All research reports issued by a member firm must disclose certain information. Regarding those disclosures, all of the following statements are true EXCEPT
A) any control relationship with the issuer must be disclosed
B) the price at the time the original recommendation was made must be disclosed
C) the name of the member firm providing the recommendation must be disclosed
D) whether the member firm has any position in the security must be disclosed
whether the member firm has any position in the security must be disclosed
The source of the recommendation, the security’s price, and that the member firm is a market maker in the security, as well as if a control relationship exists between the member and the company being recommended, must be disclosed in the research report. However, only positions in the issuers securities of 1% or more need be disclosed.
If a registered representative is suspended by FINRA’s Department of Enforcement, his first appeal would be to:
A) the SIPC.
B) the National Adjudicatory Council.
C) a federal court.
D) the SEC.
the National Adjudicatory Council.
Your broker/dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies. Filing the piece with FINRA is
A) not required
B) required to occur no later than the end of the month during which it was used
C) required at least 10 business days prior to first use or publication
D) required within 10 business days of the time it is first used or published
Filing with FINRA is required at least 10 business days prior to first use or publication for retail communications having to do with options.
Under the Code of Procedure, the maximum fine for a minor rule violation (MRV) is
A) $7,500
B) $2,500
C) $1,000
D) $10,000
$2,500
Regarding a FINRA member broker/dealer website which of the following is true?
I. When FINRA is referenced on a member broker/dealer website it is meant to imply that the broker/dealer has the approval of FINRA.
II. If FINRA is referenced on a member broker/dealer website a hyperlink to the FINRA website is mandated.
III. When FINRA or its logo is referenced it must not appear in a typeface larger or more prominent than the broker/dealer’s own name and logo.
IV.A reference to FINRA membership is mandated by FINRA on member broker/dealer websites.
II and III
There is no requirement to list or mention FINRA membership or any other SRO membership on a broker/dealer website. If however a broker/dealer chooses to have the FINRA name or logo on its website, a hyperlink to the FINRA website is required, and its name or logo may not appear in a typeface larger than or more prominent than the broker/dealer’s own name or logo and should never be meant to imply approval of FINRA.
Which of the following disputes must be resolved
using the Code of Arbitration?
I. Dispute between two FINRA members
II. Dispute between two FDIC insured banks
III. Dispute between a FINRA member and an associated person
IV. Dispute between two customers of a member broker/dealer
I and III
The Code of Arbitration is mandatory in member-against-member disputes, and in disputes involving a member and an associated person. FINRA’s code of arbitration has no jurisdiction over banks or over disputes between nonmembers such as customers.
The firm element requirement for continuing education must be completed by registered representatives and principals
A) on the 2nd registration anniversary and every 3 years thereafter
B) every 3rd year
C) on the 3rd registration anniversary and every 2 years thereafter
D) annually
annually
A broker/dealer informs registered personnel that, to satisfy the annual compliance meeting requirements, they have recorded a Webcast that individuals can view at their own convenience. A Webcast of this type would be
A) allowed for registered representatives who must be able to submit questions and receive answers at the conclusion of the Webcast but not for principals
B) allowed for principals only who must be able to submit questions and receive answers at the conclusion of the Webcast
C) allowed for all registered personnel if informed of the opportunity to submit questions and receive answers in a timely fashion
D) prohibited because this is recorded and only live Webcasts are permitted allowing for live interaction
allowed for all registered personnel if informed of the opportunity to submit questions and receive answers in a timely fashion
Using a recorded Webcast for the annual compliance meeting is allowed for all registered personnel (representatives and principals) so long as certain safeguards are in place. One such safeguard is the opportunity to ask questions and receive answers in a timely fashion; the firm’s registered individuals should be made aware of this opportunity.
Before becoming registered as a representative, an individual may
A) solicit indications of interest from prospective purchasers
B) compile a prospect list
C) effect trades for customers with commissions deferred until registered
D) send research reports to prospective clients
compile a prospect list
A representative may not solicit any orders before registration. Compiling a prospect list is a passive procedure that is not soliciting.
Which of the following circumstances could bar an agent from employment in the securities industry?
A) Being convicted of numerous traffic violations over a short time
B) Recent misdemeanor conviction regarding petty theft of cash
C) Associating with a known felon for an extended time
D) Failing to qualify by securities licensing examination as representative or principal
Recent misdemeanor conviction regarding petty theft of cash;
Conviction of a felony or a misdemeanor involving money within the past 10 years may subject an individual to a statutory disqualification from the industry. Failing to pass the exam would prohibit the individual from acting as a representative or principal, but would not disqualify that individual from performing other duties within the industry.
Market letters may be supervised as correspondence instead of retail communications
A) never
B) as long as they are distributed to 25 or fewer existing retail customers within any 30 calendar-day period
C) only when they are distributed to more than 25 existing retail customers within any 30 calendar-day period
D) at all times
as long as they are distributed to 25 or fewer existing retail customers within any 30 calendar-day period
Your broker/dealer has received a written complaint from a customer. FINRA rules require that a record of the written complaint be kept on file by the BD for how long?
A)4 years
B) 3 years
C) As long as the broker/dealer is in existence or continues to be a FINRA member firm
D) Until the complaint is resolved
4 years
Which of the following materials is subject to FINRA’s filing requirements?
A) Internal memo describing the benefits of an investment in a certain unit investment trust
B) Prospectus for a face amount certificate company
C) Retail communications for an open-end management investment company
D) Prospectus for a closed-end management investment company
Retail communications for an open-end management investment company
Which of the following statements regarding investment companies is TRUE?
A) Retail communications for investment companies must be filed within 10 business days of first use if the communication does not include a performance ranking.
B) Retail communications for investment companies must be pre-filed 10 business days before first use when the communication does not include a performance ranking.
C) Pre-filing for investment company retail communications is always required even if only generic.
D) Pre-filing for investment company retail communications is never required.
Retail communications for investment companies must be filed within 10 business days of first use if the communication does not include a performance ranking.
Which of the following are differences between the Code of Procedure and the Code of Arbitration Procedure?
I. The Code of Procedure deals with violations of the Conduct Rules, whereas arbitration is used to settle disputes.
II. Mediation is not required with the Code of Procedure but is mandatory with Arbitration.
III. Code of Procedure decisions may be appealed, whereas decisions reached under Arbitration may not.
IV. Arbitration is used for violations that are more serious than those for which the Code of Procedure is used.
I. The Code of Procedure deals with violations of the Conduct Rules, whereas arbitration is used to settle disputes.
III. Code of Procedure decisions may be appealed, whereas decisions reached under Arbitration may not.
