Unit 18

Question 1

When must an appeal be made by?

Answer 1

Within 25 days of the decision date

Question 2

Sanctions can include

Answer 2

1. Censure
2. Fine
3. Suspension up to 2 years
4. Expulsion
5. Barring a member

Question 3

FINRAs formal method of handling securities- related disputes or clearing controversies between members, public customers, clearing corporations or clearing banks. Any claim, dispute or controversy between member firms or associates persons is required to be submitted to arbitration

Answer 3

Code of Arbitration Procedure

Question 4

FINRAs formal procedure for handling trade practice complaints involving violations of the Member Conduct Rules. FINRAs Department of Enforcement is the first body to hear and judge complaints. Appeals and review of Depsrtment of Enforcement decisions are handled by the National Adjudicatory Council

Answer 4

Code of Procedure (COP)

Question 5

No arbitration claim is eligible for submission if

Answer 5

6 years or more have elapsed from the time of the event giving rise to the claim

Question 6

When must the award from arbitration be given by?

Answer 6

Within 30 days of the decision date

Question 7

What’s re the arbitration thresholds?

Answer 7

1. $50,000 or less = one arbitrator
2. $50,000-$100,000 = one arbitrator unless both parties agree to three
3. Greater than $100,000 = three arbitrators unless both parties agree to one

Question 8

Any person who worked in financial industry and any financial industry professional who regularly represents or provides services to investor parties in disputes concerning investment accounts or transactions

Answer 8

Non public arbitrators

Question 9

In arbitration, how long does the respondent have to respond to the director and claimant?

Answer 9

45 calendar days

Question 10

If a customer requests to see the pre dispute arbitration agreement she has signed, how long does a member firm have to supply it?

Answer 10

Within 10 business days of the request

Question 11

In what scenarios is arbitration mandatory?

Answer 11

1. A member against another member or registered clearing agency
2. A member against an associates person
3. An associates person against another associated person

Question 12

The arrangement whereby FINRAs Board hears and settles disputes between members, Allie’s members, member organizations and their employees. No. Members in dispute with member or employees may submit voluntarily. Once both parties agree to the process, there is no appeal

Answer 12

Arbitration

Question 13

What are the 6 categories of DRP?

Answer 13

1. Criminal disclosure
2. Regulatory action disclosure
3. Civil judicial disclosure
4. Customer complaint/arbitration/civil litigation disclosure
5. Termination disclosure
6. Financial disclosure

Question 14

When must changes to a U4 be made?

Answer 14

No later than 30 days after member is made aware of changes

Question 15

What is in Form U4?

Answer 15

1. Name, address and aliases
2. 5 year residency history
3. 10 year employment history (verify past 3 years)
4. Disclosure of felonies

Question 16

Shows that assumed rates of return may be used to demonstrate the performance of variable life policies

Answer 16

Hypothetical illustrations

Question 17

When must retail communication be delivered for options?

Answer 17

At least 10 calendar days before first use if the OCC Disclosure Booklet has not been delivered

Question 18

Who is responsible for advance approval of retail communications?

Answer 18

Registered Options Principal (ROP)

Question 19

A description issued by an independent third party. Relates to the sensitivity of the NAV of a portfolio of an open end management investment company that invests in debt securities to changes in market conditions and the general economy

Answer 19

Bond mutual fund volatility rating

Question 20

Refers to any entity that provides general information about investment companies to the public that is independent of the investment company and its affiliates and whose services are not procured by the investment company or any of its affiliates to assign the investment company a ranking

Answer 20

Ranking entity

Question 21

How long must retail communication be kept on file?

Answer 21

3 years from first use

Question 22

Within a firms first year, when must a firm file retail communication?

Answer 22

At least 10 business days before first use

Question 23

After the first year of registration, the firm may file retail communication when?

Answer 23

Within 10 business days of first use

Question 24

What type of communication does not require principal approval?

Answer 24

Institutional

Question 25

What types of communication require principal approval?

Answer 25

1. Retail
2. Correspondence
3. Website
4. Electronic bulletin boards
5. Generic advertising

Question 26

Promotes securities as an investment medium, but does not refer to any specific security

Answer 26

Generic advertising

Question 27

A document prepared by an analyst or strategist typically as. Apart of a research team for investment advisor or BD

Usually recommends buying, selling or holding an investment

Answer 27

Research reports

Question 28

Consists of any article that meets certain standards. A key requirement is that it was prepared by an independent publisher and was not materially alter by the member

Answer 28

Independently prepared reprint (IPR)

Question 29

Participation in a seminar, webinar, radio or television interview or other public speaking activity

It must be an activity that is unscripted and cannot be classified as correspondence, retail or institutional communication.

Answer 29

Public appearance

Question 30

What are 6 types of institutional accounts?

Answer 30

1. Bank
2. Savings and loan association
3. Insurance company
4. Registered investment company
5. Registered investment advisor
6. An entity with $50 million or more of total assets, including natural persons

Question 31

FINRA defines category of communications, written or electronic, distributed or made available to only one specific type of investor. It does not include a members internal communications (internal memos)

Answer 31

Institutional communication

Question 32

What are 4 examples of retail communication?

Answer 32

1. Telemarketing or sales scripts
2. Posts to interactive electronic forums
3. A storyboard of a television or video ad
4. Independently prepared reprints

Question 33

Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar day period. A retail investor is any person other than an institutional investor, regardless of whether that person has an account with the member

Answer 33

Retail communication

Question 34

FINRA defines this category of communication with the public as any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period.

Answer 34

Correspondence