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Series 7 > Unit 14-15 > Flashcards

Unit 14-15 Flashcards

1
Q

Designing currency deposits or withdrawals to fall under the $10,000 cash transaction report filing threshold

A

Structuring

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2
Q

Failure to report paying for purchased securities with currency can result in what?

A
  1. $500,000 fines
  2. Up to 10 years in prison
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3
Q

Broker dealers are required to report wire transfers of how much (currency wires)?

A

$3,000 or more

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4
Q

Broker dealers must report on FinCEN Form 112 any currency deposited or received in excess of how much?

A

$10,000 in a single day

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5
Q

Requires member firms to develop, implement and monitor anti money laundering programs designed to achieve compliance with the Bank Secrecy Act and related regulations

A

FINRA Rule 3310

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6
Q

How long can a member firm hold mail for a customer?

A

Up to 3 months. Can be granted for longer periods if for safety or security concerns

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7
Q

What are 3 things a member must do when a client died?

A
  1. Cancel all open orders
  2. Freeze accounts
  3. Await instructions from executor
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8
Q

What records must be retained for 3 years?

A
  1. Focus reports
  2. Trial balances
  3. Forms U4 and U5
  4. Fingerprint cards
  5. Confirmation of trades
  6. Order tickets
  7. Loan records
  8. Failed to receive and deliver
  9. Long and short securities differences
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9
Q

What records must be kept for 6 years?

A
  1. Blotters
  2. General ledger
  3. Stock ledger
  4. Customer ledger
  5. Customer account records
  6. Designated principals
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10
Q

What are lifetime records?

A
  1. Stock certificate book
  2. Partnership agreement or Articles of Incorporation
  3. Minutes of Board or Partnership meetings
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11
Q

How long must written customer complaints be held for?

A

4 years

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12
Q

How long does a delivery of communication for transfer last?

A

3 months

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13
Q

How long does a member firm have to complete a transfer?

A

Within 3 business days

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14
Q

How long does a firm have to validate a transfer?

A

1 business day

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15
Q

Automates and standardizes the procedure for transfers

A

Automated customer account transfer service (ACATS)

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16
Q

How long must a broker dealer retain records of all identification information obtained from a customer?

A

5 years after an account in closed

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17
Q

When must a customer receive an updated account record due to change of address, name or employment status?

A

Within 30 days

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18
Q

When must a customer receive a copy of an account record?

A

Within 30 days of the opening of the account and every 36 years thereafter

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19
Q

How often must members send statements for penny stocks?

A

Monthly

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20
Q

How often are members required to send statements?

A

Quarterly

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21
Q

How long must customer confirmations be retained?

A

3 years

22
Q

When new municipal bond issues are sold to investors before the bonds are issued and available for delivery, the investor will receive this type of confirmation. It does not include a total dollar amount or settlement date. Once bonds are issued, the investor will receive a new confirmation with purchase price and settlement date.

A

When-issued confirmation

23
Q

When must the customer be sent or given written confirmation of a trade?

A

At or before the completion of the transaction (settlement date)

24
Q

What are some items included in a trade confirmation?

A
  1. Acting as agent or principal
  2. Dual agent
  3. Commission information
  4. Sales load
  5. Markup or mark down
  6. Identity of shares, price and number of shares
  7. Total par value
  8. Accrued interest
  9. Market maker
  10. Date and time of execution
  11. Yield
  12. Handling fees
25
Q

A printed document that contains details of a transaction, including the settlement date and amount of money due from or owed to a customer

A

Trade confirmation

26
Q

What is not likely to fall under safe harbor provisions?

A
  1. Telephone lines
  2. Office furniture, including computer hardware
  3. Travel expenses
  4. Rent
  5. Payment for training expenses
  6. Internet services
27
Q

What would likely fall under safe harbor provisions?

A
  1. Research reports analyzing the performance of a particular company or stock
  2. Financial newsletter and trade journals
  3. Quantitative analytical software
  4. Seminars or conferences
  5. Effecting and clearing securities trades
28
Q

A method of behavior which avoids running afoul of the law.

Describes compensation to an investment advisor from a broker dealer that will generally not be considered unethical

A

Safe harbor

29
Q

Wrongful or unauthorized taking, withholding, appropriation or use of specified adults funds or securities

Any act or omission taken by a person, including through the use of a POA, guardianship or any other authority to obtain control through deception, intimidation or undue influence

A

Senior exploitation

30
Q

This rule deals with an issuer buying back it’s own stock in the open market

A

SEC Rule 10b-18

31
Q

For tender offers, the target company must provide its shareholders with a statement with accepting or rejecting that offer, expressing no opinion on the offer or that it is unable to take a position, within how many days?

A

10 business days

32
Q

If the terms of a tender offer are changed, the revised offer must remain open for how many days from the commencement and how many days from the date the terms are changed?

A
  1. 20 business days
  2. 10 business days
33
Q

A tender offer, unless withdrawn, under regulation 14E, must remain open for how many days from the date the offer was first announced?

A

20 business days

34
Q

A limited period SEC registered offer to acquire a substantial portion of a company’s securities (equity or debt). When a company seeks to acquire its own securities. A filing is required to disclose the terms of the offering and information about the bidders, known as the offer to purchase, along with SEC Form TO.

A

Tender offer

35
Q

A SEC Rule dealing with issuers disclosing information that can affect the price of the stock

A

Regulation Full Disclosure (FD)

36
Q

Exists when a broker dealer is owned by, is under common ownership with, or owns an entity that issues securities

A

Control relationship

37
Q

The uncertainty that the value of either the foreign currency or the domestic currency will fluctuate

A

Currency/exchange risk

38
Q

The risk that when an investor wishes to dispose of an investment, no one will be willing to buy it, or that a very large purchase or sale would not be possible at the current price

Aka: marketability risk

A

Liquidity Risk

39
Q

The risk of a country defaulting on its commercial debt obligations

Ex: when the credit rating of the US was reduced from AAA

A

Sovereign Risk

40
Q

The potential instability in the political underpinnings of the country.

A

Political Risk

41
Q

The potential for an investor to be adversely affected by changes in investment or tax laws

Ex: changes in tax code

A

Legislative Risk

42
Q

A sudden change in the regulatory climate can have a dramatic effect on the performance or risk of a business

Ex: realigns by the Environmental Protection Agency

A

Regulatory Risk

43
Q

A nonsystematic risk generally with the concern that an issuer will be unable to meet its debt obligations as they come due

Aka: credit risk, default risk

A

Financial Risk

44
Q

An operating risk generally caused by poor management decisions. Earnings are lowered at best, company goes out of business at worst.

Ex: Edsel, New Coke, BlackBerry

A

Business Risk

45
Q

What are the 8 types of nonsystematic risk?

A
  1. Business Risk
  2. Financial Risk
  3. Regulatory Risk
  4. Legislative Risk
  5. Political Risk
  6. Sovereign Risk
  7. Liquidity Risk
  8. Currency Risk
46
Q

Risk that can be reduced through diversification

Risks that are unique to the specific industry or business enterprise

Ex: labor union strikes, lawsuits, product failure

A

Nonsystematic Risk

47
Q

The potential that because of inflation, a certain amount of money will not purchase as much in the future as it does today

A

Purchasing Power Risk (Inflation Risk)

48
Q

Risk that you may be unable to reinvest the income at the same rate as the security itself is paying.

Occurs at maturity

Zero coupon bonds avoid this risk

A

Reinvestment Risk

49
Q

The systematic risk associated with investments, relating to the sensitivity of price or value, to fluctuations at the current level of rates.

A

Interest Rate Risk

50
Q

The potential for an investor to experience losses owing to day to day fluctuations in the prices at which securities can be bought or sold

Measured by securities beta.

Cannot be diversified

A

Market Risk

51
Q

What are the 4 types of systematic risk?

A
  1. Market Risk
  2. Interest Rate Risk
  3. Reinvestment Risk
  4. Inflation Risk
52
Q

The potential for a security to decrease in value, owing to its inherent tendency to move together with all securities in the same type. Neither diversification nor any other investment strategy can eliminate this risk

A

Systematic Risk

Series 7 (12 decks)

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