Unit 2 Supervision of General BD Activities Flashcards
When determining if a client qualifies for a breakpoint, mutual fund holding in all of the below accounts may be aggregated
- the client’s IRA
- the client spouse’s IRA
a UTMA account for the client’s minor, dependent child
Sales charges are applicable to all of the below
- open end funds
- variable annuities
- unit trusts
To qualify as a REIT, certain IRS requirements must be met. Which of the following are those requirements
- Invest at least 75% of its total assets in real estate assets
- Derive at least 75% of its gross income from rents from real property of interest on mortgages financing real property
- Pay annually at least 90% of its taxable income in the form of shareholder dividends.
Rule 22d-1 of the Investment Company Act of 1940 stipulates certain persons who are eligible to purchase shares of an open end investment company at prices below the public offering price. Included in that list would be
- officers of the fund’s investment adviser
- full-time employees of the fund’s sponsor
An order to redeem mutual fund shares is filled at the
next computed NAV
Under FINRA Rule 2330, a potential red flag would be
a client exchanging one deferred variable annuity for another 24 months after the initial purchase
Both open and closed end funds may
borrow from banks
A member may purchase variable contracts from an insurance company underwriter if
- there is a written sales agreement in place
- the insurance company is a member
- the member agrees to forfeit all concessions if the contract is redeemed within 7 business days of acceptance
A diversified investment company must invest at least ___ of its assets in such a way that no more than ___ of its assets are in any one company, and each investment represents no more than ___ of the target company’s voting securities
75%
5%
10%
All of the following terms apply to municipal unit investment trusts
- regulated
- redeemable
- registered
Under FINRA rules, payments made to purchase variable contracts must be forwarded to the insurance company underwriter
promptly
Which of the following activities would require a member firm to register as an investment adviser?
None of these
To register with the SEC on Form N-1A, an investment company must have capital of at least
100k
FINRA Rule 2330 dealing with members’ responsibilities regarding variable annuities applies under which of the following circumstances?
- The initial purchase of a deferred variable annuity
- The initial sub account allocations
Rule 35d-1 (the name rule) would apply to which of the below mutual fund
- GHI Global Equity Fund
- DEF Muni Bond Fund
- JKL Small Cap Fund
Which of the following would be deemed impermissible under FINRA rules?
A RR sharing disproportionately in her mom’s company trading account.
Information on customer complaints must be electronically filed with FINRA
quarterly
Under FINRA rules, the annual gift limit is
$100
Which of the following statements is true regarding explained decisions by arbitrators
Parties must submit a joint request for explained decisions to require arbitrators to provide one.
If a member wishes to appeal an adverse decision in a Code of Procedure hearing, the member must first appeal to the National Adjudicatory Council within how many days of the decision date?
25
Under the Code of Procedure, if a member receives a formal complaint from the Department of Enforcement, the member must file an answer within
25 days
If a RR is suspended for 90 days as the result of a Code of Procedure decision, during the suspension period, that person may
be paid monies earned before the suspension
Under the code of Arbitration, all monetary awards must be paid within how many days of the decision date
30
Under FINRA rules, which if the following statements is true if an associated person wishes to open an account at another member firm?
Prior notification to the employer is required.
United Money Managers is under contract to manage the assets of the GEM fund, an open end investment company registered under the Investment Company Act of 1940. This fund is their only client. The GEM Fund currently has 106 million in net assets. Which if the following is correct.
United Money Managers would have to register with the SEC
A RR recommendations to a customer
must be suitable based on the facts the customer disclose regarding other holdings and investment objectives
A customer buys 100 shares of RFTQ at $10 per share. Several months later, the stock is trading at 4.60-5, at which time the RR offers to buy back the stock from the customer for his own account at $9 per share. This action is
prohibited, because FINRA does not allow RR to guarantee customers against loss
Under Section 28e of the SE Act of 1934, which if the below is allowable soft dollar compensation form the BD to an investment advisor under the safe harbor provisions?
Custodial services provided by the BD
Ruling under the Code of Arbitration
are binding on all parties
According to the Investment Advisers Act of 1940, which if the below is defined as an investment adviser?
- a lawyer who charges a separate fee for giving specific investment advice
- a person paid to give advice on bank stocks
- a publisher of a newsletter that makes specific securities recommendations based on market events
A member firm, operating on the premises of a commercial bank, must advise new customers that securities purchased or sold are
- not insured by the FDIC
- not deposits or obligations of the bank
- subject to investment risk
Your company has been designated as having hired an excessive number of licensed personnel from a disciplined firm. The company must arrange to monitor all sales efforts, including taping conversations between salespersons and the public. How long does the company have to install the required systems and procedures?
60 days
FOCUS part IIA reports must be submitted
quarterly
Under SEC rules, all of the below info must be on a customer confirmation
- whether the member acted as agent or principal
- whether the member is a market maker and the security is bought or sold
- whether the member has a control relationship with the issuer
A customer’s margin account is long 400 shares of XYZ currently trading at $18 per share. Under FINRA rules, the minimum maintenance margin requirement for this account is
$1800
A customer purchases stock in a cash account and pays for the purchase on the following business day. Under FINRA rules, the purchase is complete
when the securities are delivered into the account
A member firm maintains a list of borrowable securities for short sale purposes. Under FINRA rules, this list must be updated
daily
Which if the statements regarding joint accts/tenants in common is true
- each party specifies a percentage interest in the account
- the interest of a deceased tenant passes to the estate of the decedent
Which of the below investments does SIPC provide coverage
- common stock
- municipal bonds
A customer has a short margin account that has a credit balance of $39000 and a market value of $26000. The short market value at maintenance is
$30,000
An established member firm discovers that its AI exceeds its net capital by more that 12:1. Under SEC 17a-11, which of the statements are true?
- Notice withing 24 hours is required
- Notice must be made electronically
A principal is required to approve discretionary order tickets
promptly after execution
The deposit of fully paid securities into a long margin account increases all of the following
- market value
- equity
- SMA
The agreement that allows the member firm to use customer securities as collateral for a loan is the
hypothecation agreement
A power of attorney is not required for a RR to choose which of the below order qualifiers?
- Time of execution
- Price of execution
An order ticket, under FINRA rules, must be prepared before
the execution of the order