19: COMMUNICATIONS WITH THE PUBLIC (51)

Question 1

Does retail communication posted on an interactive online forum need to be filed with FINRA

Answer 1

No

Question 2

Does correspondence need to be filed with FINRA

Answer 2

No

Question 3

Does retail communication posted online that requires a login to access need to be filed with FINRA

Answer 3

Yes

There’s no expemtion for requiring login to access

Question 4

Define: correspondence

Answer 4

Any WRITTEN communitcation distributed or made available to 25 or fewer retail investors within any 30 calendar-day period.

Question 5

do prospective customer count for “retail communication”

Answer 5

Yes

If send email to >25 prospective customers, retail communitcation (within 30 days)

Question 6

T/F: principal approval is necessary for virtually all retail communications

Answer 6

True

Question 7

Does a email sent to 10 muncipalities in 5 days offering underwriting sercives count as correspondence?

Answer 7

No
Communications with government entities, which includes municipalities, fall under the heading of institutional communications.

Question 8

T/F: Communications with government entities, which includes municipalities, fall under the heading of institutional communications.

Answer 8

True

Question 9

Does sales /advertising material have to be written by the principal?

Answer 9

No

Just approved by him

Question 10

Can a principal review corresponsence communications after it’s taken place

Answer 10

Yes
FINRA rules state that principal review of correspondence can take place before or after use, in accordance with the member firm’s written procedures.

Question 11

T/F: Any retail communication that makes a financial or investment recommendation would require filing with FINRA

Answer 11

True

Question 12

T/F: In most cases, retail communications must be filed with FINRA while correspondence, regardless of the method of delivery, is not.

Answer 12

True

Question 13

Under Options Clearing Corporation (OCC) rules regarding options communications with the public, if an educational piece making no projected performance figures or recommendations is distributed to customers, it

A)
can only be distributed to retail customers.
B)
need not be preceded by an options disclosure document (ODD).
C)
need not be approved by a registered options principal (ROP).
D)
can only be distributed to institutional customers.
Explanation

Answer 13

B) does not need an options disclosure document

Question 14

A registered representative is preparing a PowerPoint slide presentation, to be delivered in a live seminar, for a group of invited institutional clients. To use the slides, they may have to be

A)
submitted to the SEC for review and approval.
B)
submitted to both FINRA and the SEC for preuse approval.
C)
approved by FINRA in writing.
D)
reviewed by a principal of the broker-dealer.

Answer 14

D) reviewed by principal of BD

Explanation
Communications material that is intended for use with institutional customers only need be supervised and reviewed by a principal of the member firm. Alternatively, if the member’s procedures do not require review of institutional communications, they must include a provision for the education and training of associated persons so that they will understand the firm’s requirements. Though FINRA can request spot checks of any material used to communicate with the public, submission of institutional communications to FINRA or the SEC for review or approval is not required.

LO 19.c

Question 15

T/F: The U.S. government does not issue or back CMOs.

Answer 15

True

US gov does’nt issue or back CMOs

Question 16

Your broker-dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies.
Is filing with FINRA required 10 days before or after the adversisment is used

Answer 16

10 days before first use or publication

Question 17

Your broker-dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies. Filing the piece with FINRA is

A)
required to occur no later than the end of the month during which it was used.
B)
required at least 10 business days before first use or publication.
C)
required within 10 business days of the time it is first used or published.
D)
not required.

Answer 17

c) required 10 days before first use

Explanation
Filing with FINRA is required at least 10 business days before first use or publication for retail communications having to do with options.

LO 19.d

Question 18

Does instutional communcations need to be preapproved by a principal?

Answer 18

No

“FINRA does not require principal preapproval of institutional communications. The same is true for internal communications. “

Question 19

onmembers of a syndicate who are assisting in its sale of bonds buy the bonds at a discount called

A)
a net designated price.
B)
the basis price.
C)
a concession.
D)
a takedown.

Answer 19

C) concession

Explanation
Members of the syndicate buy the bonds at the offering price minus the takedown, and nonmembers buy at offering price minus a concession. The basis price is the yield to maturity.

LO 20.b

Question 20

Pristine Brokerage Services, (PBS), accepted as a FINRA member firm seven months ago, is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation programs. Under FINRA Rule 2210 on communications with the public, this is considered

A)
a retail communication and must be filed with FINRA at least 10 business days before first use or publication.
B)
correspondence and needs review, not approval by a designated PBS principal.
C)
a retail communication and must be filed with FINRA within 10 business days of first use or publication.
D)
a retail communication that needs approval, but not filing, by a designated PBS principal.

Answer 20

A) retail communication, filled with finra at least 10 days before first use

> company is within first year of membership
so any retail communication must be filed with FINRA 10 days before use

“Explanation
The key here is that PBS is within its first year of membership. As such, any retail communications (and a communication to more than 25 existing and/or potential clients within a 30-day period is retail communications) must be filed with FINRA at least 10 business days before first use. Retail communications must be approved by a designated principal before filing with FINRA. A more complete answer would have had both the approval and the filing, but sometimes a test question focuses on a single point such as this one does.”

Question 21

T/F: Municipal securities advertisements must be approved by a municipal securities or general securities principal.

Answer 21

True

Approved my muni securities or general securities principal

Question 22

Does retatil communications posted on an online interactive forum need to be filled with FINRA?

Answer 22

No, not need to be filed with FINRA

Question 23

Regarding the “short swing” rule. If an affiliate of a public company realizes a profit within 6 months from swing trades, he must return any profit to the issuer

Answer 23

True

If affiliate makes “short swing” money, has to return profits to issuer

Question 24

T/F: Under Regulation A, an offering of $20 million or less in a 12-month period is a Tier 1 offering. Unlike a Tier 2 (up to $50 million) offering, there are no restrictions based on net worth or net income

Answer 24

True

“Under Regulation A, an offering of $20 million or less in a 12-month period is a Tier 1 offering. Unlike a Tier 2 (up to $50 million) offering, there are no restrictions based on net worth or net income”