Unknowns 1 Flashcards
Days and Numbers
An investor’s eligibility to purchase an equity new issue must be confirmed _______________.
annually (called the pre-condition of sale).
T/F: For a seasoned issuer, a shelf registration becomes effective immediately.
False. A seasoned issuer may use a shelf registration, but it will be subject to SEC staff review.
A ________ state occurs if the NBB is below the lower band or the NBO is above the upper band, but not in a limit state.
straddle state occurs if the NBB is below the lower band or the NBO is above the upper band, but not in a limit state.
Letters of Intent may be back-dated for _____ days.
90 days
Nasdaq system hours are _____ a.m. to _____ p.m. ET.
4:00 a.m. to 8:00 p.m. ET
The Special Reserve Bank account must be evaluated by a carrying firm on a _______ basis.
weekly basis
How often are the circuit breakers that are used to determine the triggering of a trading halt reset?
Daily
True or False: An order-entry firm has 10 seconds to accept or reject a trade report submitted to FINRA.
False. The order-entry firm has 20 minutes to accept or reject a trade report submitted to FINRA.
How often must market centers publish reports of the efficiency of executions?
Monthly
True or False: National best offers below the Limit Up-Limit Down upper price band are non-executable.
False. An NBO below the Limit Up-Limit Down upper price band is executable.
Trades executed through an electronic system are reported _______________.
Trades executed through an electronic system are reported automatically.
Trades executed through an electronic system are reported _______________.
Automatically
Any awards granted by an arbitrator must be paid within how many days?
30 days
A syndicate member must wait ____ calendar days before publishing research on the issuer’s IPO
10 calendar days
Once a TRACE report is made, when is the information available to the public?
Immediately
Under LULD rules, failure to exit the limit state within 15 seconds results in a ____ minute trading pause.
Under LULD rules, failure to exit the limit state within 15 seconds results in a five minute trading pause.
How many business days prior to presentation must evidence of incumbency be dated?
No more than 60 days
What are the system hours of operation for the ADF?
8:00 a.m. to 6:30 p.m. ET
If a BD’s investment company communications include self-created rankings, when must they be filed with FINRA?
At least 10 business days prior to use
If the terms of a tender offer are changed, for how many additional days must the offer remain open?
For at least 10 business days from the change
Define short-swing profit.
A profit earned on stock held less than six months
Once placed, a tender offer must remain open for at least ____ business days from the announcement.
at least 20 business days
For how long are securities restricted if received by the syndicate as compensation?
Six months
True or False: Trades executed between 8:00 p.m. and 8:00 a.m. ET must be reported within 10 seconds of execution.
False. The 10-second reporting requirement applies to trades executed between 8:00 a.m. and 8:00 p.m. ET.
Issuers of actively traded securities may not purchase their own shares during the last ____ minutes of trading.
during the last 10 minutes of trading.
BDs must review their fidelity bond coverage __________.
annually
An offering’s effective date is generally the _____ day after the filing of the last amendment.
An offering’s effective date is generally the 20th day after the filing of the last amendment.
If a storyboard has been filed, when must the final version of a TV or video advertisement be filed with an SRO?
Within 10 business days of initial broadcast
When is FOCUS Report Part II (for carrying BDs) and FOCUS Report Part IIA (for introducing BDs) required to be filed?
Within 17 business days of the end of the quarter
When do CAT reports need to be submitted to FINRA?
On the trading day after the data is recorded
If a BD’s equity is below ____% of its debt-equity total, a violation will occur if not corrected within ____ days.
Below 30%
90 days
Under the Code of Procedure, a decision must be rendered within ____ days after collection of evidence stops.
within 60 days after collection of evidence stops.
The SEC may suspend trading for up to ____ business days for an individual issue.
10 business days
Upon validation of a transfer, the transfer must be completed within ___ business days.
Upon validation of a transfer, the transfer must be completed within 3 business days.
A penalty imposed by a hearing panel is generally effective ____ days after assessment.
A penalty imposed by a hearing panel is generally effective 30 days after assessment.
Once notified by a Code of Procedure hearing panel, the hearing must be held within ____ days.
28 days
Rule 147 offerings may not be sold to an out-of-state investor for ____ months following the last sale of a new issue.
Rule 147 offerings may not be sold to an out-of-state investor for __6__ months following the last sale of a new issue.
What time limit exists for issuers/affiliates of actively-traded securities that are repurchasing their own security?
They may not purchase their security within the last 10 minutes of the trading day
When must a company file a Form 10-K with the SEC?
Annually
QIB stands for ___________________________.
Qualified Institutional Buyer (QIB).
Customer ledgers (account records) are maintained for ____ years.
six years
True or False: National best bids below the Limit Up-Limit Down lower price band are non-executable.
True. The stock’s Securities Information Processor (SIP) will identify the NBB as non-executable.
As stated in a BD’s supervisory program, with whom must the CEO annually conduct a meeting?
The BD’s Chief Compliance Officer (CCO)
Can an analyst that works at the lead underwriter for an IPO, release a research report one month after the IPO date?
Yes. Research analysts are only restricted from releasing research for 10 days after an IPO.
A DVP transaction must be completed within ____ calendar days.
A DVP transaction must be completed within 35 calendar days.
The final settlement of a syndicate account must occur within _________ of the syndicate closing.
The final settlement of a syndicate account must occur within 90 days of the syndicate closing.
By what date must a clearing firm send to the introducing firm the list of all reports that it can generate?
By July 1st. Thereafter, the introducing firm may request any of the reports listed.
The Limit Up-Limit Down (LULD) rules address sudden price movements in ____ stocks.
The Limit Up-Limit Down (LULD) rules address sudden price movements in NMS stocks.
True or False: Under Limit Up-Limit Down rules, a trading pause may occur if a security enters a straddle state.
True. The primary listing market may declare a trading pause when the security is in a straddle state.
For a WKSI, a shelf registration becomes effective ______________.
For a WKSI, a shelf registration becomes effective immediately.
What is the ADF reporting system?
The ADF reporting system reports trades in securities quoted in the Alternative Display Facility (ADF).
In what does a real estate investment trust (REIT) invest?
A diversified portfolio of properties and/or mortgages
Under Sarbanes-Oxley, how often must a company file reports detailing internal controls over financial reporting?
Annually
Schedule ___ must be filed with the SEC within ____ business days of acquiring more than __% of a company’s stock.
Schedule 13D must be filed with the SEC within five business days of acquiring more than 5% of a company’s stock.
Notice of a buy-in may not be delivered to the seller sooner than ____ business day after settlement.
Notice of a buy-in may not be delivered to the seller sooner than 1 business day after settlement.
Investors may not purchase a new issue if those shares were sold short ____ business days prior to the offering.
Investors may not purchase a new issue if those shares were sold short 5 business days prior to the offering.
Customers are given ____ business days after settlement date to pay for their portion of a trade (i.e., S+__ or T+__).
Customers are given three business days after settlement date to pay for their portion of a trade (i.e., S+3 or T+4).
Unless appealed, when do penalties become effective under the Code of Procedure?
No later than 30 days from the decision
Retail communication for an investment company may contain what limited information and NOT be considered a prospectus?
Fund objective, emphasis on growth or income, and names of principal officers
If a client’s equity falls below 25%, the maintenance call must be met __________.
If a client’s equity falls below 25%, the maintenance call must be met promptly.
When may telemarketers place calls to prospective clients?
From 8:00 a.m. to 9:00 p.m. on any day of the year
In the after-market, for how long must a prospectus be provided following an IPO of a stock to be listed on an exchange?
25 days
True or False: A temporary location used less than 30 business days per year is a branch office.
False. If used less than 30 business days per year, a temporary location is a non-branch office (e.g., a vacation home).
Filing Form 211 is not required if stock has been the subject of regular and continuous quotes for the past ____ days.
Filing Form 211 is not required if stock has been the subject of regular and continuous quotes for the past 30 days.
When does a decision to ban or expel a registered representative from association with a member firm become effective?
Immediately
Short securities differences will have a 100% haircut (reduction) after how many days have elapsed?
28 days
How many days advance notice is provided to clients if a BD changes loan terms (e.g., interest rate)?
30 days
When must a BD buy in the securities if a selling client fails to deliver securities?
No later than 10 business days from settlement of the transaction
A person must register with the SEC within ____ days of becoming an insider by filing Form ___.
A person must register with the SEC within 10 days of becoming an insider by filing Form 3.
A satisfactory subordinated loan has a minimum maturity of ________.
1 year.
When is a BD required to report operational difficulties?
Within 24 hours
What happens if a variable contract is sold to a client who then cancels the contract within seven business days?
The selling BD must return its portion of the sales charge.
True or False: Under Reg. S, investors may resell non-convertible debt in the U.S. even if held for less than one year.
True. Non convertible debt has a 40-day holding period.
Secondary market trades involving CMOs and CDOs (collateralized debt obligations) must be reported
within 60 minutes.
Who is entitled to the cash or stock dividend?
When must it be settled by for the cash or stock dividend?
Buyers must have settled their trades on or before record date to be entitled to a
cash or stock dividend (record and ex-date are the same day)
Fines in excess of $____ and arbitration awards of $_____ or greater must be reported on ______. These awards would also be disclosed to the public through FINRA’s ________.
$2,500
$15,000
Form U4
awards would also be disclosed to the public through FINRA’s BrokerCheck system.
If a member firm sends another member firm a mark-to-the-market demanding the deposit of additional cash, the member firm receiving the demand must comply ______?
promptly
Payment for order flow is disclosed on
the customer confirmation
Solicited, unsolicited, and discretionary orders are marked on the
Order ticket
MOO (market-on-open) orders may be modified up to _______ ET. After that, no modifications are permitted.
9:28 a.m. ET
A broker-dealer has been notified that one of its associated persons is subject to statutory disqualification. If the firm wants to pursue eligibility proceedings:
It must file an MC-400 application within 10 business days
When is a broker-dealer NOT required to use the contemporaneous cost to determine the markdown on a bond transaction?
Changes in issuer’s:
-financial condition (news report)
-credit rating
-prevailing market interest rates
If contemporaneous cost is NOT used, fair market value is determined in this order:
1. Recent prices between dealers,
2. Recent interdealer quotes
3. Prices of equivalent securities
The function of the Nasdaq Market Center Execution System that allows part of a market maker’s interest to remain non-displayed is called:
Reserve size
A member firm must begin to deduct from its net capital any unresolved short security difference that has existed for more than ________.
seven business days
What is a stopped order or stopping stock mean
DMM guarantees the purchase or sale of a security at a specified price or better
The maximum amount of compensation that the underwriter of a direct participation program may receive is limited to what percentage of the gross dollar amount of the securities sold?
10%
Hard copies of processed fingerprint cards (or any substitute record if the cards are not returned after being processed) must be retained:
At the firm’s principal office
Notice of a distribution by an issuer must be made to FINRA no later than _____ to the _____ in all of the following instances,
10 days prior to the record date
-forward or reverse stock split
-rights offering
-A dividend
Notification is not required for interest payments
An introducing broker-dealer with a $5,000 minimum net capital requirement may
Engage in occasional transactions for its proprietary account
An applicant seeking registration must disclose a ___ residential history and ___ employment and bankruptcy history
5 year
10 year
What is also referred to as delayed delivery?
Seller’s option
the seller either cannot or chooses not to deliver on a regular-way basis.
the delivery date can be anywhere from T+3 to a date that’s specifically written in the contract.
simplified industry arbitration filing
It involves one non-public arbitrator and a claim not exceeding $50,000
If a broker-dealer does NOT carry customer funds or securities, but receives a customer check that’s made out to a third party, it should be forwarded to the third party
By noon on the following business day
Which offerings will permit a U.S. public company to quickly raise an unlimited amount of capital from an unlimited number of both accredited and non-accredited investors without registering the securities with the SEC?
Regulation S
Nasdaq rules prohibit using supplemental MPIDs by an equity market maker when?
to engage in passive market making or entering stabilizing bids
Rule 145
reclassifications of securities to be registered includes:
-the substitution of one security for another
-securities exchanged for a merger or consolidation
-a transfer of assets of one corporation for another.
Not subject to Rule 145:
stock splits, reverse stock splits, and changes in par
When executing a block order, the firm may trade a related security for its own account
after the entire block transaction has been executed AND reported
What can determine a spread?
The financial condition of the issuer
The recent trading activity of the issuer
Market conditions
Orders that are reported into the CAT system must include trades in:
Only NMS stocks, listed options and OTC equity securities
private investment in public equity (PIPE)
sold under Regulation D to accredited investors over an extended period at various prices.
Once the PIPE offering is announced, the share price will decline b/c increase in the number of shares (potential dilution) and the perception the company is in need of capital.
Branches are defined as locations where _____securities trades are effected annually. If a representative uses a vacation home to transact business for ________ per year, the location qualifies as a branch.
25 or more
30 business days or more
A member must provide a customer with a copy of a signed predispute arbitration clause within ___of a request, or within _____ of the signing, whichever is earlier. After receiving the copy, the customer must _______.
within 10 business days of a request
within 30 days of the signing whichever is earlier.
After receiving the copy, the customer must acknowledge receipt on the signed form or other document.
Concerning a transaction between two broker-dealers, written notice of a buy-in is required to be delivered
buying broker-dealer (delivery due) must send a buy-in notice to the seller no later than noon two business days before the execution of the buy-in.
What activities are considered collusive behavior
-Maintaining a spread requested by another market maker
-Coordinating price quotes w/ another member
-Delaying trade reporting when requested by another market maker
-Indirectly attempting to influence another member to adjust a quotation
-Refusing to trade with another member that engages in competitive activities
On the NYSE, an MOC or LOC order may be cancelled for any reason up until:
3:50 p.m.
up until 3:58 p.m., orders can be canceled or reduced in size only if a legitimate error has been made
Which of the following will permit an insider to trade during a blackout period?
Rule 10b5-1 plan
Reserve Bank Account pursuant to Rule 15c3-3
-Deposits must be made on the second business day following the calculation
-The account must be maintained separately from any other account of the broker-dealer
-Computations under the Reserve Formula may be made weekly or monthly
-BD may use the amounts labeled as total credits under the Reserve Formula only for the specific purposes indicated under total debits
What is the primary goal of a risk-based trade review process?
Avoiding SRO rule and securities laws infractions
Risk-based review means a firm is not required to conduct detailed reviews of each transaction b/c risk-based review system provides the firm with sufficient information to enable the firm to focus on the areas that pose the greatest numbers and risks of violation.
written customer complaints, they may be maintained in what type of office?
Any location, provided they can be made available promptly to an office of supervisory jurisdiction upon a request by FINRA
As a general rule, a firm is required to maintain all written customer complaints in an OSJ for a period of four years. An exception is made if the firm maintains the records at another location or in electronic form and agrees to make them available promptly at that OSJ upon a request by FINRA.
temporary subordination agreements may only be used to increase ______ for ______ underwritings.
net capital
firm-commitment
The 5% Policy applies to which of the following transactions?
Equity and debt trades
