Unit 4 Flashcards
Registration
National Adjudicatory Council (NAC) establishes rules, regulations, membership eligibility and standards.
Broker Dealer Registration
any broker dealer registered with SEC is eligible to apply for membership to FINRA
affects transactions - broker dealers, investment bank - also register with FINRA
municipal bond firm - register with FINRA
firms agreement to:
- comply with association rules and regulations
- comply with federal securities laws
- pay dues, assessments, other charges in manner and amounts fixed by association
application made to FINRA district office, passes qualification, accepted into membership
Associated Person
any person associated with member firm who intends to engage in the investment banking or securities business must be registered with FINRA as an associated person.
must be sponsored by firm
member firm must ascertain persons business reputation, character, education, qualification, experience.
a member firms failure to register an employee who performs any function of a registered representative may lead to disciplinary action by FINRA
associated person may also be disciplined
no broker dealer may allow someone been barred to associate without commissions express permission
Fingerprint records
RR BD must have fingerprint records
sent to US Attorney General
sales, handle cash
receptionist handles incoming mail would need to be fingerprinted
Fingerprint exemptions
those selling only mutual funds, variable annuities, or direct participation programs are exempt from fingerprinting.
certain broker dealer employees are exempt
- not involved in securities sales
- not handle or access to cash, securities, books, records of entry
- do not supervise
Registered Representative (RR)
all associated person engage in investment banking and securities industry
- assistant officer not function as principal
- individual supervises, solicits, conducts business
- trains people to supervise, solicit, conduct
Registered Principal
anyone who manages or supervises any part of a members investment banking or securities business must be registered with FINRA.
Unless member firm is sole proprietorship - employ 2 registered principals.
Ineligibility
may not act unless FINRA eligibility standards are met
statutory disqualification - disciplinary sanctions by SEC, SRO, foreign, may be cause for statutory disqualification
Rejected Registration
- expelled or suspended from membership in any SRO or foreign
- under SEC order/ foreign order denying, suspending, or revoking registration, barring
- found to be cause of another BD to be expelled
- misstatements willfully made in application
- any felony, misdemeanor involving securities money
- court conjunctions prohibiting
Central Registration Depository (CRD)
maintains information on disciplinary history of all person currently registered.
customer can access
broker check required on all FINRA member websites
Denied Membership
- expelled or suspended
- subject to SEC ordering, suspending, revoking
- willfully filed false or misleading application
while bankruptcy or unsatisfied lien does not disqualify one from registering, failure to disclose the facts would
Continuing Education Requirement
registered person are required to participate in CE
firm and regulatory element
CE - Firm Element
requires member firms to prepare annual training plan taking into account recent regulatory developments, scope of member firms business activities, performance of its personal.
must be given to all registered person who have direct contact with public
CE - Regulatory Element
requires all registered persons to complete computer based training sessions within 120 days of persons second registration anniversary and every three years thereafter.
content is determined by FINRA and is appropriate to RR or principal status of person
if fail to complete - FINRA will deactivate until met
Home Offices
approval of member firm SRO is required
all normal business activities are permitted
subject to premise visits
home office address, telephone advertised in any normal manner.
FINRA Rules
- Conduct Rules
- Uniform Practice Code
- Code of Procedure
- Code of Arbitration