UNIT 27 CHECKPOINT EXAM Flashcards
For institutional communication the rule allows for either preapproval or review. However, if the firm allows the communication to go out before approval by a principal then
A) the review must occur within 10 minutes of transmission.
B) the associate must have at least 10 years industry experience.
C) the principal must preapprove the topic of the communication.
D) the associate must have training on these communications.
D) the associate must have training on these communications.
Explanation
The rule allows the firm to require pre-use approval or allow for postuse review. If the firm allows postuse review then the associates must receive education and training on communications with institutions.
FINRA rule 2210 on communications with the public would apply for all of the following except
A) A voicemail left for a customer
B) A website
C) A text message
D) A flyer sent to 20 prospects
A) A voicemail left for a customer
Explanation
Rule 2210 applies to written communication. Written communication does not require paper, just words made up from letters. If they can read it, it is considered written communication.
The Telephone Consumer Protection Act mandates that unsolicited sales calls must occur
A) no earlier than 9:00 am and no later than 9:00 pm recipient’s time.
B) no earlier than 8:00 am and no later than 9:00 pm solicitor’s time.
C) no earlier than 8:00 am and no later than 9:00 pm recipient’s time.
D) no earlier than 9:00 am and no later than 8:00 pm recipient’s time.
C) no earlier than 8:00 am and no later than 9:00 pm recipient’s time.
Explanation
The rule is that calls may only occur between 8:00 am and 9:00 am prospect’s time. Though 9:00 am to 8:00 am and 9:00 am to 9:00 am fits within the time allowed, that is not the rule.
Regulation S-P requires that financial institutions provide information to customers and consumers concerning
A) a consumer’s right to opt out of the disclosure of nonpublic personal information to nonaffiliated third parties.
B) their policies on the protection of nonpublic personal information.
C) the categories of nonpublic personal information that a broker-dealer, fund, or registered investment adviser may collect and disclose.
D) all of these.
D) all of these.
Explanation
All of these are part of Regulation S-P.
Which broker-dealers or investment advisers are obligated to maintain a business continuity plan?
A) State registered investment advisers only
B) Broker-dealers only
C) Federally registered investment advisers only
D) All broker-dealers and investment advisers
D) All broker-dealers and investment advisers
Explanation
All securities firms, both B-Ds and IAs, must have a business continuity plan (BCP).
There are rules regarding customer statements. All of the following statements reflect those rules except
A) activity limited to only stock splits or stock dividends do not require monthly statements be sent.
B) customer statements must be sent no less frequently than quarterly.
C) customer statements containing penny stocks must be sent monthly, even if no activity occurred in the account.
D) customers must be alerted to report any inaccuracies or discrepancies promptly.
A) activity limited to only stock splits or stock dividends do not require monthly statements be sent.
Explanation
Any activity in an account such as purchases and sales, dividends and interest, and stock splits and stock dividends will trigger the requirement to send a monthly statement. If there is no activity, statements are only required quarterly, unless the account contains penny stocks in which case a statement is required for any month penny stocks are in the account. All statements sent require notice that inaccurate information is reported promptly.
The TCPA requires that businesses that solicit by phone maintain a do-not-call registry that must be republished every
A) 30 days.
B) quarter.
C) year.
D) 3 months.
A) 30 days.
Explanation
Do-not-call registries are republished every 30 days. Numbers do not age out of the do-not-call list. If a number is on the list, do not call.
The Telephone Consumer Protection Act of 1991 exempts all of these entities except
A) debt collectors.
B) booking services for commercial enterprises.
C) not-for-profit companies.
D) survey takers.
B) booking services for commercial enterprises.
Explanation
If the cold caller is looking to book appointments for a commercial entity, it must abide by the rules. Legitimate efforts made to collect a debt, those taking polling surveys, and charities are exempt from these rules.
All of the following are classifications of communication under Rule 2210 except
A) institutional.
B) wholesale.
C) retail.
D) correspondence.
B) wholesale.
Explanation There is no wholesale class of written communication.
A client phones his registered representative in September and informs the representative that he will be studying abroad in Europe for the remainder of the year. The client wants the firm to hold his mail. What action should the representative take?
A) The representative should have all mail forwarded directly to the branch to protect against identity theft.
B) The representative must instruct the client that the request must be made in writing.
C) The representative should temporarily change the client’s address to a secure PO box to prevent the theft of his mail.
D) The representative should send duplicates to Paris since the SEC customer protection rules state mail cannot be held.
B) The representative must instruct the client that the request must be made in writing.
Explanation
FINRA rules require that all requests to hold mail must be made through written instruction from the customer. The instruction must include the period during which the mail hold is requested. If the requested period included in the instructions is longer than three consecutive months, then the customer’s instructions must include an acceptable reason for the request (e.g., safety or security concerns).
Communicating the information in a firm’s BCP to customers occurs at all of the following times except
A) when requested.
B) at account opening.
C) ongoing on the firm’s website.
D) annually.
D) annually.
Explanation
There is no annual communication requirement for a business continuity plan (BCP).
All of these are true regarding correspondence except correspondence
A) must be filed with FINRA within 10 business days.
B) must be to 25 or fewer retail customers or prospects within 30 days.
C) must be in good faith.
D) may be reviewed after use (postreview).
A) must be filed with FINRA within 10 business days.
Explanation
Correspondence may be either pre-use approval or postuse review; it is the firm’s decision. All communication with the public must be in good faith. Correspondence may go to 25 or fewer persons within 30 days. Unlike retail communication, correspondence does not need to be filed with FINRA.
The TCPA only restricts solicitations that are delivered via
A) the telephone lines.
B) email.
C) facsimile.
D) voice telephone calls.
A) the telephone lines.
Explanation
The Telephone Consumer Protection Act of 1991 restricts any solicitation that uses a telephone line.
An institutional customer has requested that you provide an article that they can use in their quarterly retail client newsletter. Rule 2210 states that you must
A) have a principal review the communication and a copy must be filed with FINRA.
B) obtain preapproval from a principal, but no filing is required.
C) obtain preapproval from a principal and file a copy with FINRA.
D) have a principal review the communication but no filing is required.
C) obtain preapproval from a principal and file a copy with FINRA.
Explanation
Even though this is going to an institutional customer, you have good reason to believe it will be sent to retail customers; as such, this must be treated as retail communication.
Regulation S-P defines consumers and customers correctly in which of these statements?
I. A customer has an ongoing relationship with the company.
II. A consumer performs a onetime transaction with the company.
III. A consumer has an ongoing relationship with the company.
IV. A customer performs a onetime transaction with the company.
A) I and II
B) I and III
C) III and IV
D) II and IV
A) I and II
I. A customer has an ongoing relationship with the company.
II. A consumer performs a onetime transaction with the company.
Explanation
Customers have an ongoing relationship and should receive an annual Regulation S-P notice. Consumers are entitled to receive the notice once.
