8. Books and Records of the BD Flashcards

(27 cards)

1
Q

What is the name for a firm that has been expelled from SRO membership or had their SEC registration revoked?

A

A Disciplined Firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

If a firm has 20 or more RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status?

A

> 20%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

If a firm has 10 - 20 RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status?

A

4 or more RRs / 20 - 40%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

If a firm has 5 - 9 RRs, what percentage of RRs previously employed by a “disciplined firm” triggers taping firm status

A

> 40%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

In determining whether a firm should be a taping firm, does it matter if RRs previously employed by a disciplined firm were individually disciplined?

A

No - does not matter; mere association with a disciplined firm in the LAST THREE YEARS is sufficient to be counted in the taping firm math

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a firm designated if they exceed a threshold % of RRs associated with disciplined firms?

A

A taping firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

If a firm has been designated a taping firm FOR THE FIRST TIME, what can they address and in what time period?

A

They can do staff reductions of RRs that result in levels below the threshold levels WITHIN 30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

If 30 days elapse after being notified of being a taping firm, how much time is remaining before taping compliance is mandatory?

A

30 additional days

60 days total from the time of first notice of designation as a taping firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Once required to tape conversations, how long does this requirement last?

A

Taping is required for 3 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

If designated a taping firm, are firms allowed to tape only selected conversations of RRs?

A

No taping firms must record telephone conversations between ALL RRs and existing / potential customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

True / false: a firm is allowed to hire individuals to “dilute” the percentage of RRs associated with disciplined firms

A

False - only cure is staff reductions cannot hire “clean” RRs to dilute the calculation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

If staff is reduced to avoid being deemed a taping firm, how long must firms wait before rehiring them

A

180 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

For the taping firm requirement, when a BD calculates the percentage of RRs formerly employed by disciplined firms, it does NOT include employees who have been employed for this time period (with no disciplinary history)

A

RRs who have been employed for 90 days or less with no disciplinary record are NOT counted in the calculation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How long must recordings produced at a taping firm be kept?

A

three years (two in an easily accessible location)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

GENERAL BUSINESS records must be kept for how long from date of last use?

A

3 years (2 easily accessible)

Examples
- forms u4 / u5
- retail & inst advertisements
- customer trade confirmations
- finger print records
- reg D private placement records
- WSPs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

CUSTOMER COMPLAINT records must be kept for how long?

A

4 years (6 years in the case of muni-related complaint) at the OSJ w 2 years easily accessible

17
Q

AML records, including suspicious activity reports and currency transaction reports must be kept for how long?

A

5 years (2 easily accessible)

18
Q

BUSINESS AND FINANCIAL / ACCOUNTING records (sales blotter, general ledger, list of persons assigned to explain the records) of a BD must be kept for how long?

A

6 years (2 easily accessible)

NOTE - this is a default period if not already assigned a category

19
Q

How long would fundamental records like articles of incorporation, partnership agreement, minute book, Form BD etc be required to be kept?

A

a firm’s lifetime

20
Q

True / false: BDs are not allowed to keep electronic records, only paper ones

A

false - can keep electronic so long as it uses micrographic media (to preserve record w integrity - non-rewriteable and non-erasable)

21
Q

These are records of original entry, containing daily account of all transaction of the firm and its customers (e.g., purchases, sales, receipts, deliveries)

A

Blotters

NOTE - blotters would NOT record commissions

22
Q

Customer account records (such as new account form) must be kept for how long (post account closing)?

A

6 years post account closing

23
Q

How long must a BD’s firm trial balances be prepared / retained?

A

trial balances are prepared monthly and must be retained for 3 YEARS

24
Q

A BD must notify FINRA at least how many days prior to using electronic storage media for record keeping purposes?

A

at least 90 days

25
If a firm goes out of business, who has responsibility to maintain the books and records for duration of remaining retention period?
The firm designates a books and records custodian on form BDW and responsibility passes to this entity
26
How does FINRA require “taping firms” to catalog records of all calls taped?
Each record must be cataloged by DATE and REGISTERED PERSON
27
If a customer in a two party consent state wants to talk to a RR from a taping firm and does not consent, can they engage with that RR / firm?
Yes but only meet in person