Unit 30 QBank Flashcards
Firms applying for Financial Industry Regulatory Authority (FINRA) membership are required to
I. agree to be in compliance with all federal securities laws.
II. pay dues, assessments, and other charges the association levies.
III. pass the appropriate qualification exam(s).
IV. attend a FINRA annual conference no less frequently that once every three years.
A) I and III
B) II and III
C) II and IV
D) I and II
D) I and II
I. agree to be in compliance with all federal securities laws.
II. pay dues, assessments, and other charges the association levies.
Explanation
Firms must agree in their membership application that they will comply with all federal securities laws and make payment of dues and assessments when requested. Although qualification exams must be passed by individuals representing the firm, there is nothing requiring the firm itself to do so, nor is attendance at FINRA conferences required.
After receiving a written complaint letter from a client, a registered representative should
A) forward copies immediately to Financial Industry Regulatory Authority (FINRA) or the appropriate self-regulatory organization (SRO).
B) employ a thorough investigation and provide a report to the Securities and Exchange Commission (SEC).
C) contact the client immediately to attempt reaching a resolution to the issue.
D) turn the complaint over to the appropriate supervisor or principal.
D) turn the complaint over to the appropriate supervisor or principal.
Explanation
Any representative receiving a written customer complaint is required to turn the complaint over to a supervisor or principal without delay.
Registered broker-dealers must have fingerprint records for most of their employees and for which of the following?
A) Drivers
B) Partners
C) Doorman
D) Receptionist
B) Partners
Explanation
Registered broker-dealers must have fingerprint records made for most of their employees, and all directors, officers, and partners. Those who are ancillary to the securities business and do not speak about securities with the investing public or who do not handle funds or securities are generally not required to be fingerprinted.
In which of the following circumstances would a firm be denied Financial Industry Regulatory Authority (FINRA) membership?
A) The firm has been expelled or suspended by the foreign equivalent of an self-regulatory organization (SRO).
B) The firm has only been in existence for three months.
C) The firm has only two principals and four registered representatives.
D) The firm plans to only allow registered representatives to invest in equities and fixed notes for their customers.
A) The firm has been expelled or suspended by the foreign equivalent of an self-regulatory organization (SRO).
Explanation
Firms will be denied membership if the applicant has been expelled or suspended by another self-regulatory organization (SRO) or from the foreign equivalent of an SRO.
In general, the first industry form that a new applicant for registration sees is the Form U-4. This lengthy form requests information about the applicant’s
I. name including any aliases.
II. residency history back through the previous two years.
III. 10-year employment history.
IV. convictions, but not arrests, dealing with any securities related violations.
A) I and III
B) II and IV
C) III and IV
D) I and II
A) I and III
I. name including any aliases.
III. 10-year employment history.
Explanation
The Form U-4 contains the applicant’s name as well as any aliases used. Residence history is shown for the past five years and employment history for the past 10 years. Charges, arrests, and convictions for securities related violations must be disclosed.
All associated persons must be fingerprinted if they handle
A) direct mail programs.
B) cash and securities.
C) cold-call lists.
D) new account forms.
B) cash and securities.
Explanation
Any associated person put in a position that would have them handle cash or securities would be required to be fingerprinted.
An individual would most likely be statutorily disqualified from working in the securities industry for which of the following reasons?
A) Willful failure to disclose motor vehicle fines in excess of $1,000
B) Charged with driving under the influence of alcohol resulting in personal injury—a felony
C) Willful failure to disclose personal bankruptcy or unsatisfied liens
D) Conviction for misdemeanor assault
C) Willful failure to disclose personal bankruptcy or unsatisfied liens
Explanation
A willful misstatement or omission made on an application for membership or registration as an associated person is deemed a serious infraction of securities law that would likely lead to a statutory disqualification from the securities industry. The Form U-4 does not ask about motor vehicle fines per se. Felonies convictions have to be disclosed, as do misdemeanor convictions involving money or securities.
The U-4 form requires registered representatives to disclose all of the following except
A) 10-year residency history.
B) any aliases.
C) information on any criminal charges, even if found innocent.
D) 10-year employment history.
A) 10-year residency history.
Explanation
The U- 4 form only requires a five-year residency history.
Information on the Form U-4 is extensive and includes names (aliases) and addresses in addition to which of the following?
A) 2 years employment and 3 years of residency history
B) 5 years of residency and 10 years of employment history
C) 3 years of employment and 3 years of residency history
D) 10 years of residency and 5 years of employment history
B) 5 years of residency and 10 years of employment history
Explanation
Information required on Form U-4 includes name, address, any aliases, 5-year residency history, and 10-year employment history.
When a new associated person is hired at a broker-dealer firm, which of the following is responsible for seeing that Form U-4 is completed and filed?
A) The employing broker-dealer firm
B) The Securities and Exchange Commission (SEC)
C) The new employee
D) The local Financial Industry Regulatory Authority (FINRA) district office
A) The employing broker-dealer firm
Explanation
Though the new employee furnishes most of the information contained in Form U-4, it is the responsibility of the employing firm to arrange for the information to be placed on the form and filed.
Which of the following is true regarding a registered person who wishes to move her registration from one broker-dealer to another?
A) A person who has been registered more than 25 years is grandfathered in and no filings need to be made.
B) If the registered person has taken and passed the Series 24 General Securities Principal Exam, no filings need be made.
C) Only Form U-5 need be filed, separating the registered person from the existing employer.
D) In no circumstances can a registration be transferred from one firm to another.
D) In no circumstances can a registration be transferred from one firm to another.
Explanation
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 U-5 with the Central Registration Depository (CRD) within 30 days of the termination date. A Form U-4 must then be filed by the new employer with all of the form’s information requirements met.
All of the following are required when completing Form U-4 except
A) legal name and any aliases used.
B) educational degrees.
C) employment history for the past 10 years.
D) date of birth.
B) educational degrees.
Explanation
Among the extensive information required on Form U-4, residence history for the past five years, employment history for the past 10 years, legal name and any aliases and date of birth would all be listed. Educational degrees and marital status are not required, but full-time education is included in the 10-year employment history.
Fingerprint records are required for each of the following employees of a registered broker-dealer except
A) a registered representative who sells or offers to sell municipal or government bonds.
B) a clerk who handles customer physical securities.
C) those whose duties are limited to supervising clerks who handle the books and records of the firm.
D) a receptionist greeting customers and directing them to the appropriate registered representative within the office.
D) a receptionist greeting customers and directing them to the appropriate registered representative within the office.
Explanation
Certain broker-dealer employees (typically clerical) are exempt from the fingerprinting requirement, if they are not involved in securities sales, do not handle or have access to cash or securities or to the books and records of original entry relating to money and securities, or do not supervise other employees engaged in these activities.
Fingerprint cards are required by the Securities and Exchange Commission (SEC) to be filed with
A) the U.S. Attorney General.
B) Financial Industry Regulatory Authority (FINRA).
C) any self-regulatory organization (SRO) approved by the SEC.
D) the SEC.
A) the U.S. Attorney General.
Explanation
The SEC upon application for registration requires that fingerprint cards be filed with the U.S. Attorney General.
FINRA firms must employee at least how many principals?
A) Two
B) Four
C) Five
D) Three
A) Two
Explanation
The rule requires at least two principals, unless the firm only has one individual working for the firm.
