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Series 7 > Rules & Regs > Flashcards

Rules & Regs Flashcards

1
Q

Death docs

A
  1. Affidavit of domicile
  2. Death certificate
  3. Letters testamentary
  4. Inheritance tax waiver
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2
Q

Insiders

A

10% owners or
Access to non public info, and immediate family

Must file form 3 w/in 10 biz days

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3
Q

U4

A

Changes notified w/in 30 days, valid for 2 yrs,

Reg element - every 3 years
Firm element - every year

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4
Q

Restricted stock

A

Stock held by insiders, issued Privately. 6 month holding time frame

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5
Q

Bearer bonds

A

1k or 5k, coupons, no name

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6
Q

Finra rule 5130 common stock restrictions and exemptions

A

Common stock IPO, cannot be sold to restricted persons: brokerage firms, ee’s of the former, immediate family, attorneys/accountants that helped w/ UW, PM’s, insiders of BD’s, investment club owners

Exemptions: ee’s, subsidiaries, customers, creditors, suppliers, of the issuer

Does not apply to:
Exempt securities, investment co’s, preferred stock, bonds, adr’s, dpp’s, primary, secondary, combo

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7
Q

Erroneous share report

A

Incorrect # of shares can reject

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8
Q

Record keeping requirements

A 
6 yrs - most acct stuff
5 yrs - SARs, ID's
4 yrs - complaints
3 yrs - everything
2 yrs - easily accessible
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9
Q

Maloney act

A

1938, created nasd, forerunner of finra

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10
Q

Sell out

A

Failure to pay by settlement date

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11
Q

Confirmation

A

Sent at or prior to completion of transaction

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12
Q

Settlement

A

Test yourself

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13
Q

Payment extensions for settlement can be provided by?

A

Finra, fed, any exchange

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14
Q

Account statements frequency

A

Active - monthly
Inactive - quarterly
Mutual fund - semi annual

AIM

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15
Q

Contemporaneous cost

A

Used for inactive , non competitive securities

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16
Q

COP - code of procedures

A

Method if resolving disputes, can be appealed

Order of appeal: panel, nac, sec, fed, supreme

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17
Q

Penny stock

A

Valued at less than $5, can only be OTC

Risk disclosure doc required for ALL purchases

Suitability statement signed by customer except:
Accredited investor
Unsolicited
Established cust
BD transaction
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18
Q

Prime brokerage

A

500k min or

100k min if with an IA

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19
Q

Simplified arbitration

A

Member vs non member, less than 50k, 1 person panel

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20
Q

Self regulatory organization SRO

A

Any exchange, nyse, finra, msrb

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21
Q

New acct signatures

A

Rep - no
Customer - no (unless margin)
Principal - yes

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22
Q

AML reporting

A

Report the following:
$10k - submit to CTR to fincen form 112

$5k SAR

$3k - only need to record

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23
Q

Finra rule 5121 UW requirements for IPO

A

Regulates issue of securities for IPO, must use qualified UW, 3 issues, 3 yrs, 3 same size

For non IPO offerings cannot use UW

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24
Q

Dividends regular way trade

A

But before the ex date to get divs

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25
Q

Finra rule 2111

3 components of suitability

A
  1. Reasonable basis - some investors
  2. Customer specific - one customer
  3. Quant suitability - series of transactions
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26
Q

Markdown

A

Sell at the bid

27
Q

Transfer agent

A

Managed certificates, responsible for good delivery, sends divs, sends proxies

28
Q

Inspections

A

Osj annually
Branch 3 yrs
Min branch periodic

29
Q

Dividends cash trade

A

Buy on or before record date

30
Q

Finra fees

Assessment vs. Fee

A

Assessment on transactions

Fees on # of branches and reps

31
Q

Sarbanes Oxley

A

2002, regulates reporting of issuers, separation of bankers and analysts, CEO and CFO certify all fin reports

Only security registration also requires majority of board

32
Q

Deadline to settle trades

A

35 days but funds must be in bank acct w/in 5 days

33
Q

Trades subject to 5% policy

A
  1. Principal - dealer charges markup/markdown
  2. Agency - broker charges a commission
  3. Risk less - simultaneous, firm buys own inventory for resale
  4. Proceeds - sell used to buy
34
Q

A-CAT

A

Written notice to distributing firm, one day to verify, 3 days to send

35
Q

Simplified industry arbitration

A

Member vs member, less than 50k, 1 person panel

36
Q

Insider trades

A

SEC form 4 w/in 2 biz days after trade

37
Q

Trades exempt from 5% policy

A
  1. New offerings, IPO, primary, secondary, combined
  2. Member to member
  3. Exempt securities
38
Q

Institutional lit

A

No need for filing or principal approval

39
Q

Advertisements

A

Non targeted

40
Q

Net capital

A

Minimum requirement, calculated monthly, on balance sheet

41
Q

Registrar

A

Maintains list of shareholders, ensures issued shares don’t exceed authorized

42
Q

Buy in

A

Failure to deliver certs

Acct frozen 90 days

43
Q

Rule 144 control stock restrictions

A

Control stock restriction
Can sell up to 1% of outstanding shares or avg trading volume of last 4 weeks, whichever is Greater

Only pertains to selling of shares

44
Q

Erasure guarantee

A

A form of power of substitution used for incorrect spelling of name

45
Q

Erroneous report rule

A

Discrepancy on price between report and transaction must be accepted

46
Q

Fully registered bonds

A

1k up to 100k, no coupons, named

47
Q

Dividend calendar

A

DERP
2 days between ex and record

NYSE sets the ex date, board of directors does the rest

Divs and splits reported to finra/sec w/in 10 biz days prior to record date

48
Q

Finra investor education and protection rule

A

Provided annually, finra website and address, disclosure hotline, stmt of availability

49
Q

Insider trades exemptions

A

Prearranged trading plan
Cannot short sell
Can sell at loss or Breakeven

50
Q

Markup

A

Buy at the ask

51
Q

Inside info

A

Released simaltaneously via media, including social or SEC form 8k, w/in 4 days of event

52
Q

Control stock

A

Stock held by insiders, purchased Publicy

53
Q

UGMA

A

Think Generic, $1050 tax free, $1050 taxed at minor rate of 10%, rest taxed to guardian

54
Q

SEC

A

Created 1934, regulates investors, issuers, b/d,

55
Q

5% owners

A

File form 13-D with SEC w/in 10 days

Plus each time 1% increase until 10%

56
Q

Relevant factors for finra 5% guideline

A

PEAS

Price
Expense
Availability
Size

57
Q

Contemporaneous price

A

Used for inactive, competitive securities

58
Q

Good delivery - lots

A

Must be multiples, divisors or add up to 100

59
Q

Lit filing requirements

A

Most require filing w/in 10 biz days AFTER 1st use

Exemptions:
Tombstone
No recommends
Recruiting
Already filed
60
Q

Sales ads

A

Targeted

25/30

61
Q

Principals approve:

A

New accts
Advertising
Complaints
Trades

62
Q

DERP

A

Record date is 2 days after ex

63
Q

Suitability factors

A

All of the above excluding educational

64
Q

Min junk fax fine

A

$500 per page

Series 7 (13 decks)

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