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Flashcards in Chapter 2 Deck (35)
1

When must RRs complete the Regulatory Element of Continuing Education?

On the 2-year anniversary of their registration and every 3 years thereafter.

2

True or False: Firm Element Continuing Education requires BDs to update employees on job and product-related subjects.

True

3

To apply for a securities license, one must file Form _____ with FINRA.

U4

4

Gifts exceeding $_____ are considered excessive.

$100

5


__________________________ expenses are not subject to the Gift Rule.

Entertainment/business expenses

6

In the process of opening an account for an employee of another firm, what must be done by the carrying firm?

Provide written notification to the employer

7

For accounts opened for employees of another member firm, what is provided to the individual's employer upon request?

Duplicate confirmations and statements

8

True or False: FINRA regulates accounts of member firm employees opened at another firm.

True. Also spouse and children

9


A BD must file Form U5 with FINRA when a person's association with that firm ______________.

ends/ceases

10

What are the justifiable reasons for denying an individual's registration?


Conviction for any felony or securities-related misdemeanor within the last 10 years

11

How often must a BD's Firm Element Continuing Education program be reevaluated?

annually

12

Do all outside activities of an RR require notification to an employer?

No. Notification is only required for employment activities, not hobbies.

13


What is the industry policy regarding an RR who sets up an outside business that involves paid public speaking?

This is considered employment and the RR must receive employer approval.

14

Which department of a broker-dealer makes recommendations to investors?

Sales

15

Which department of a broker-dealer executes securities transactions?

Trading

16

What is the role of a broker-dealer's operations department?

To process paperwork, handle funds and securities transfers, and settle and confirm transactions

17

The Maloney Act of 1938 is credited with creating which SRO?

The NASD. In 2007, the regulatory units of the NASD and NYSE merged to create FINRA.

18

What is the purpose of the Trust Indenture Act of 1939?

To provide security for corporate bond investors

19

True or False: The Investment Company Act of 1940 requires mutual fund managers to register.

False. The Investment Advisers Act of 1940 is the Act that requires money managers to register.

20

Which Act created SIPC?

Securities Investor Protection Act of 1970 (SIPA)

21

List the four categories of FINRA rules.

1. Conduct Rules 2. Uniform Practice Code 3. Code of Procedure 4. Code of Arbitration

22

Define penny stock.

OTC security, less than $5

23

What is the CRD?

The Central Registration Depository (CRD). CRD is FINRA's database for member registrations.

24

Who supervises a registered representative (RR)?

Principal (Supervisor)

25

What is the purpose for obtaining a Series 9/10 or Series 24 registration?

The Series 9/10 or 24 the registrations required for supervising registered representatives.

26

List the broker-dealer employees who need to be fingerprinted.

Salespersons, employees who handle money or securities, and anyone who deals with records of original entry

27

___________ is FINRA's tool for allowing public access to certain information found in the CRD.

Brokercheck

28

Candidates who have failed a qualification exam once must wait ___ days before retaking the exam.

30

29

True or False: It is acceptable to disclose the content of a qualifying exam to a co-worker.

False

30

How often must firms conduct their compliance meeting?

Annually

31

True or False: An RR who served in the military must retake the Series 7 when he rejoins his broker-dealer.

False

32

True or False: A broker-dealer may pay a commission to an unregistered individual.

False

33

Define Churning

Excessive trading solely for the purpose of generating commissions or fees

34

True or False: RRs are always prohibited from sharing in a customer's account.

False. RRs may share in a customer's account if they have permission and sharing is proportionate to their investment.

35

True or False: RRs are typically not permitted to lend money to a client.

True. While exceptions existing, personal loans to clients are typically prohibited.