Cie Flashcards
(147 cards)
1
Q
Retention Requirement for U5 forms
A
Three years
2
Q
Retention Requirement for records of advertising
A
Three years
3
Q
Retention Requirement for customer confirmations
A
Three years
4
Q
Records of advertising, customer confirmations, customer order tickets, and U5 forms need to be retained for how many years?
A
Three Years
5
Q
Customer order tickets retention period
A
three years
6
Q
Records of original entry must be recorded no later than the next business day and must be kept readily available for
A
The records must be maintained for a period of six years, but must be readily available for two years.
7
Q
A customer submits a written complaint stating that funds were stolen from an account held at a member broker-dealer. Resolution of this complaint will take place by
A
The COP governs the resolution of violations of the Code of Conduct.
8
Q
Investigations and hearings into alleged violations of FINRA’s Code of Procedure are performed by
A
This is the job of the Department of Enforcement (DOE). DOE decisions may be appealed to the NAC (National Adjudicatory Council). Code of Procedure violations do not go to the arbitration panel. There is no Division of Engagement.
9
Q
Schmidt, a customer, has sent a written complaint to a firm principal. After a conversation with the customer, the principal was able to resolve the customer’s concerns. How long must the complaint be held on file after the resolution?
A
Any record of written complaints must be kept for four years.
10
Q
Keegan and Drew, spouses, have a checking account at Gloria City National Bank. The balance is $450,000. What is their protection from SIPC if Gloria City fails?
A
There is no coverage for Keegan and Drew. SIPC covers broker-dealers, not banks.
11
Q
Who does SIPC cover
A
SIPC covers broker-dealers, not banks.
12
Q
How long do blotters, general ledgers, and stock records need to be maintained?
A
These are all six-year records.
13
Q
How long do blotters records need to be maintained?
A
Six years
14
Q
How long do general ledgers need to be maintained?
A
Six years
15
Q
How long do stock records need to be maintained?
A
Six years
16
Q
Written complaints are kept for
A
Complaints are kept for four years after resolution.
17
Q
SIPC coverage amount is what?
A
The maximum coverage is up to $500,000 in cash and securities but no more than $250,000 in cash.
18
Q
An arbitration panel finds Great Plains Securities at fault in a trade error and orders the firm to pay the customer $1,200. Great Plains may appeal the decision to whom? When must such awards be paid by?
A
There is no appeal to an arbitration reward. Such awards must be paid within 30 days.
19
Q
If a married couple have a joint account with a market value of $1 million and a debit balance of $600,000, all of which is in securities, how much coverage would this account have? Why?
A
$400,000.
A joint account has a maximum coverage of $500,000; however, in a margin account only the equity is covered, so the debit balance is subtracted from the market value, leaving $400,000 equity.
20
Q
The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following
A
The UPC established uniform trade practices and other guidelines or broker-dealers to follow when they do business with other member firms, including transaction settlement, good delivery, ex-dates, trade confirmations, and DK procedures.
21
Q
Who does the MSRB rely on for enforcement of rules?
A
Financial Industry Regulatory Authority (FINRA).
(The MSRB regulates all matters related to the underwriting and trading of state and municipal securities but does not have enforcement powers. It depends on other SROs (e.g., FINRA) for the enforcement of its rules.)
22
Q
All of the following self-regulatory organizations (SROs) function under the Securities and Exchange Commission’s (SEC’s) oversight
A
FINRA, MSRB, CBOE
(Financial Industry Regulatory Authority, Municipal Securities Rule Board, Chicago Board Options Exchange)
23
Q
What does FINRA acronym stand for
A
Financial Industry Regulatory Authority
24
Q
What does MSRB acronym stand for
A
Municipal Securities Rule Board
25
What does CBOE acronym stand for
Chicago Board Options Exchange
26
What does SEC acronym stand for
Securities and Exchange Commission
27
What does FSLIC acronym stand for
Federal Savings and Loan Insurance Corporation
28
Does FSLIC fall under SEC oversight?
No
29
What is the largest self regulatory authority?
FINRA
30
Under the Uniform Securities Act (USA), state laws require that registered representatives must register in a state in which of the following circumstances?
State laws require that broker-dealers with an office in the state, or those that direct calls into the state or receive calls from the state, be registered in that state.
Registered representatives must register in a state if they are residents or if they solicit business in a state.
31
The Securities and Exchange Commission (SEC) may take all of the following actions against registered persons
Place limits on activities related to the securities business, suspend registration, issue a letter of censure.
32
Can the SEC arrest and prosecute an individual for financial criminal activity.
No, the SEC cannot arrest a natural person, but it can contact the U.S. Department of Justice.
33
Which regulatory body oversees trading in the over-the-counter (OTC) market?
FINRA
34
Who regulates all matters related to investment banking (securities underwriting)?
FINRA
35
Who regulates trading in the OTC market?
FINRA
36
Who regulates trading in the NYSE-listed securities
FINRA
37
Who regulates the conduct of FINRA member firms and associated persons?
FINRA
38
Which of the following cannot enforce their own rules? (MSRB,FINRA,SEC,CBOE)
The MSRB relies on FINRA and the SEC to enforce its rules for broker-dealers, and banking regulators to enforce their rules for banks.
39
What is the retention period for customer complaints?
A minimum four-year record retention is required for
40
What is the retention period for a firm's original articles of incorporation?
???
41
What is the record retention period for trade blotters?
???
42
What is the record retention period for trade confirmations?
3 years
43
The Office of the Comptroller of the Currency supervises
National Banks, Federal savings associations, Foreign banks operating in the United States
(The Office of the Comptroller of the Currency supervises nearly 1,400 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the United States. The mission of the comptroller is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. The comptroller also serves as a director of the Federal Deposit Insurance Corporation.)
44
Who serves as director of the Federal Deposit Insurance Corporation?
The comptroller of the currency serves as director of the Federal Deposit Insurance Company (FDIC)
45
How does the Office of Comptroller of the Currency supervise Broker Dealers?
It does not supervise Broker Dealers.
46
What is not covered by the FDIC?
Investment precuts that are not deposits are not covered by the FDIC. (Life insurance policies, mutual funds, annuities, and individual securities such as stocks and bonds).
47
Under the Uniform Securities Act (USA), broker-dealer registrations must be renewed how frequently?
Annually. (State laws require that registrations must be renewed annually for broker-dealers with an office in the state or those who direct calls into the state or receive calls from the state.)
48
Tony was fired for cause from Great Plains Investments. A U5 Form was promptly filed stating that the cause was rude treatment of coworkers creating a hostile work environment. Great Plains will keep the U5 record for a minimum of
U5s have a three-year retention requirement.
49
Which of the following regulatory bodies regulates but has no enforcement powers? (SEC,MSRB,FINRA,CBOE)
The MSRB regulates all matters related to the underwriting and trading of state and municipal securities. While they have the authority to write the MSRB rules and regulations, they have no enforcement powers.
50
What does the MSRB regulate?
The MSRB regulates all matters related to the underwriting and trading of state and municipal securities.
(While they have the authority to write the MSRB rules and regulations, they have no enforcement powers.)
51
Under what conditions can an exchange revoke a corporate charter?
A corporate charter is grated by a government entity, usually a state. An exchange can not revoke it.
However, a firm whose corporate charter has been revoked will likely see a delisting shortly thereafter.
52
Who lists or delists a security from an exchange?
The exchange itself has this authority.
53
Who can set the capital requirements for members of an exchange?
The exchange itself has this authority.
54
Who can set the order priority for an exchange?
The exchange itself has this authority.
55
All of the following are self-regulatory organizations (SROs) except
(MSRB,SEC,FINRA,NYSE)
All U.S. exchanges such as the NYSE and Chicago Board Options Exchange (CBOE) are SROs. In addition, FINRA and the MSRB are SROs. The SEC is not.
56
How long must monthly and quarterly statements be kept?
Monthly and quarterly statements must be kept for six years.
57
The buy and sell and quantity information on the order tickets and confirmations statements will show up on what customer statements
monthly or quarterly statements.
58
How long must confirmations and order tickets be kept?
The confirmations and order tickets must be kept for three years.
59
Uniform Securities Act (USA) provides a legal framework for the registration of
The USA provides a legal framework for the state registration of securities. It may be adopted by individual states and adapted to their needs.
60
What is the Uniform Securities Act?
The Uniform Securities Act is a model law created as a starting point for state-level securities regulation. The purpose of the Uniform Securities Act is to deal with securities fraud at the state level and to assist the Securities and Exchange Commission (SEC) in enforcement and regulation.
61
A firm's monthly financial report must be kept for how long?
Three Years
62
Under the Securities Exchange Act of 1934, registration is required for
People and places
(Under the Securities Exchange Act of 1934, broker-dealers and domestic exchanges are required to register with the Securities and Exchange Commission (SEC).)
63
Under the Securities and Exchange Act of 1933, registration is required for
Paper/New issues.
(Registration of securities and IPOs is a requirement of the Securities Act of 1933, sometimes called the Paper or New Issues Act. The SEC does not have authority over foreign exchanges.)
64
What authority does the SEC have over foreign exchanges?
The SEC does not have authority over foreign exchanges.
65
Which of the following regulatory authorities relies exclusively upon other examining authorities to enforce its rules? (MSRB,NYSE,FINRA,CBOE)
The MSRB.
(It differs from other regulatory bodies in that it writes its own rules, but by law, it cannot enforce them. Rather, the board must rely entirely upon other designated examining authorities to enforce its rules.)
66
How does the MSRB differ from other regulatory bodies?
The MSRB differs from other regulatory bodies in that it writes its own rules, but by law, it cannot enforce them. Rather, the board must rely entirely upon other designated examining authorities to enforce its rules.
67
What covers disputes over money between representatives, member firms, and customers?
Code of Arbitration
68
Which of the following sets of FINRA rules focuses on disputes in the industry and with customers who have filed a predispute agreement?
Code of Arbitration
69
What is arbitration?
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
70
Pre-arbitration vs. arbitration
pre-arbitration is a process through which issuers or acquirers can contest an initial chargeback. In contrast, arbitration is when the parties involved—the bank, cardholder, and merchant—cannot resolve a dispute on their own, so a representative of the card network is asked to intervene and make a judgment.
71
predispute arbitration agreement definition
The term “predispute arbitration agreement” means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.
72
Dwight was appointed a principal for Seacoast Securities in June of 1996. He continued in the position until 2012, when he left to start his own firm. How long did Seacoast need to maintain the record of his principal designation?
Principal designations are retained for six years after the designation ends. Six years after Dwight left is 2018.
73
Which of the following is not a FINRA rules set?
(Uniform Practice Code, The Department of Enforcement, The Code of Procedure, The Code of Arbitration)
The Department of Enforcement.
The DOE investigates and holds hearings on violations under the Code of Procedure.
74
What doe The Conduct Rules outline?
The Conduct Rules set out fair and ethical trade practices that member firms and their representatives must follow when dealing with the public, including reportable events.
75
How long must customer complaints be kept on file by the broker-dealer?
The rule requires customer complaints to be kept on file for four years.
76
The following records must be maintained by a broker-dealer: partnership records, articles of incorporation, records of the board of directors, Form BD, and amendments to the form. How long must they be maintained by the firm?
These records are considered to define the firm and must be kept as long as the firm is in business.
77
The securities industry is highly regulated, and as such, it is important for broker-dealers to keep detailed records. If a customer complaint has been received regarding the actions of a registered representative, it will be maintained at the office of supervisory jurisdiction for a period of
Copies of all customer complaints must be maintained in a file at the office of supervisory jurisdiction for a period of four years.
78
What act created the SEC?
the Securities Exchange Act of 1934 created the SEC
79
What act requires the registration of new issues?
the Securities Exchange Act of 1933 requires the registration of most new issues.
80
What act created the SIPC?
The Investor Protection Act of 1970.
81
What act created the MSRB?
The MSRB was created by the Securities Market Improvement Act of 1975.
82
Is the SEC a SRO?
No, the SEC is a government entity not an SRO.
83
Is the NYSE a SRO or government entity?
The NYSE is a SRO.
84
What organization was created to protect investors financially from a bank failure?
The Federal Deposit Insurance Corporation (FDIC).
85
What does the FDIC provide?
The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank.
86
Who sets the initial margin requirements?
initial margin requirements are set by the Federal Reserve under Regulation T.
87
What does FINRA do?
creates and administers security licensing requirements, sets its own membership requirements, and may investigate complaints from customers.
88
What is the only record that must be kept for four years? Who keeps it?
Customer complaints are the only record that must be kept for four years. It is kept by the broker-dealer.
89
How long must a U4 be kept after the rep terminates.
3 years after the rep terminates. So if the rep worked for the firm for 20 years, the form would have to be kept for 23 years.
90
While the Municipal Securities Rule Board (MSRB) writes the rules and regulations regarding underwriting and trading for municipal securities, it does not enforce those rules. Who does?
While the MSRB has rulemaking authority, it has no authority to enforce those rules. The enforcement of the MSRB rules on broker-dealers has been primarily delegated to FINRA. Bank regulatory agencies, such as the Federal Reserve Board (FRB), enforce the MSRB rules on banks who act as municipal dealers.
91
Broker-dealers that transact securities business with customers or other broker-dealers must apply and be approved for registration with
The SEC is the securities industry's primary regulatory body. Broker-dealers that transact securities business with customers or with other broker-dealers must apply and be approved for registration with the SEC.
92
If an associated person is barred from the securities industry, when may the individual associate with another member firm and in what capacity?
If the SEC bars an associated person, no broker-dealer may allow that person to associate with it in any capacity unless the SEC has granted express permission to do so.
93
Is the FDIC a SRO?
No?
94
Is the SEC a SRO?
No it is a government entity.
95
Is the FRB a SRO?
No?
96
What is considered the primary SRO in the securities industry?
FINRA
97
What are sanctions FINRA could impose under the Code of Procedure?
Bar an associated person from the industry forever, issue a fine to the member firm or associate, censure the violator, require license exams.
98
How long must record of a customer complaint be retained?
4 years after resolution.
99
Amendments to articles of incorporation are kept for how long?
Kept indefinitely. For the life of the company.
100
The MSRB has jurisdiction for making rules in all of the following cases except
A)broker-dealers trading municipal securities.
B)municipalities selling their own securities.
C)banks selling municipal securities.
D)broker-dealers underwriting municipal securities.
B "Municipalities selling their own securities"
(The MSRB makes regulations for broker-dealers and banks buying and selling municipal securities but does not have authority over the municipalities.)
101
What is the name for the legal framework of state laws for broker-dealers, registered representatives, investment advisors and investment advisor representatives?
Uniform Securities Act (of 1956)
(The Uniform Securities Act is a template for state security laws in the United States).
102
When was the Investment Advisor Act of what date
1940
103
Uniform securities act of what date?
1956
104
What does FDIC Insurance cover? Total amount? What about the 4 listed here?
FDIC insurance covers up to $250,000 per depositor, per insured bank account. That includes deposit accounts like checking accounts, savings accounts, money market accounts and certificates of deposit (CDs). Coverage limits depend on the way your deposits are held
105
Which federal agency is tasked with enforcing tax law?
Internal Revenue Service (IRS)
106
The Federal Deposit Insurance Corporation (FDIC) protects depositors' money in FDIC member banks to what limit?
FDIC coverage is per person, per account, split evenly. For example, a joint account with two owners would be covered up to $500,000.
107
U4 forms must be kept for
3 years after the associate leaves the firm.
108
FOCUS reports, U4 forms, and order tickets are examples of records that must be kept for
These documents must be kept on record for three years.
(U4 is 3 years after associate leaves the firm)
109
Broker-dealers who transact securities business with other broker-dealers or customers must be registered with
Any entity such as a broker-dealer intending to do business with other broker-dealers or customers involving securities must be registered with the SEC.
110
A broker-dealer's registration with the Securities and Exchange Commission (SEC) conveys that the SEC
has accepted the member firm’s registration to do business.
Registration with the SEC in no way implies that the SEC has passed upon or approved the broker-dealer's financial standing, business, or conduct. Any such claim or statement is misrepresentation.
111
The federal agency that oversees the national banks and other financial institutions is
The Office of the Comptroller of the Currency supervises nearly 1,400 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the United States.
112
Which of the 2 following records must be kept for six years? (customer statements, Customer new account forms, customer confirmations, customer order tickets)
Customer statements, Customer new account forms
113
Which of the following records must be kept for the life of a broker-dealer firm? (customer ledgers, forms U4 and U5, Stock certificate books, the general ledger)
Certificate books on the stock issued by the firm must be kept as long as the firm is active.
The general ledger and customer ledgers need only be kept for six years, and forms U4 and U5 regarding the firm's associated persons need only be kept for three years.
114
How long do general ledger need to be kept for?
The general ledger need only be kept for six years
115
How long do customer ledgers need to be kept for?
six years
116
How long must Customer new account forms be kept?
six years
117
How long do stock records need to be kept?
six years
118
How long do minute books of the directors' meeting need to be kept?
Minute books showing the minutes of directors' meetings are lifetime records.
119
How long should advertising the firm has published be kept?
Advertising need only be kept for three years.
120
Which of the following represents securities normally included in the financial markets?
Equity, debt, currency, and derivative products.
121
Are commodities a security? Where do they trade?
Commodities are not considered a security and trade in the commodity market.
122
What is the firms stock certificate book? How long is it held?
The stock certificate book, also known as the stock book or stock ledger, is a permanent record of a corporation's capital stock and is to be held for the life of the corporation.
123
How long are written customer complaints kept for?
4 years
124
Correspondence must be maintained by a member firm for
Correspondence, along with all other communications with the public, must be maintained for three years since last use.
125
How long must blotters be kept?
Six years
126
How long must customer account records be kept?
6 years
127
What are trial balances? How long must they be kept?
Trial balances, usually run at the end of a reporting period to ensure that the firm's credit and debit columns arrive at identical sums, must be kept for three years after the trial balance was run.
128
A customer has a significant amount of money in bank deposit accounts: $225,000 in a savings account titled in the customer's name; $240,000 in a checking account titled jointly with a spouse; and $100,000 in an account where the customer is custodian for a grandchild. Should that bank fail, the Federal Deposit Insurance Corporation (FDIC) insurance would cover
The entire $565,000.
The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank.
Each account listed (savings, checking, and custodial) is a **separate ownership category under FDIC rules**, so all the money in each of them is covered.
129
How long must the compliance and procedures manual be kept?
The Compliance and Procedures Manual, which must frequently be updated, is a three-year record.
130
How long must a list of home, regional, and branch offices be kept?
List of home, regional, and branch offices must be kept for three years.
131
If an associated person is expelled from the securities industry, when may they associate with another member firm?
If the SEC expels or bars an associated person, no broker-dealer may allow that person to associate with it in any capacity unless the SEC has granted express permission to do so.
132
Which FINRA rule set focuses on broker-dealers doing business with other broker-dealers?
The Uniform Practice Code deals with interactions with other broker-dealers.
133
Which FINRA rule set focuses on broker-dealers and representative's relationships with the customer and the public?
The Conduct Rules. These deal with a broker-dealer's (and representative's) relationship with the customer and the public.
134
What is a trade blotter?
???
135
How long must a FINRA member firm maintain a file copy of a complaint?
A file of a complaint must be maintained for four years *following resolution*.
136
A customer of a broker-dealer has a cash balance in an account of $175,000 and securities holdings of $125,000. The customer asks about SIPC coverage, and you explain that the current coverage is
The SIPC covers customer accounts in broker-dealers to a maximum of $500,000, of which no more than $250,000 may be cash. In this case, the full $175,000 of the cash balance and all of the $125,000 securities holdings are covered for a total of $300,000.
137
Financial Industry Regulatory Authority (FINRA)'s Conduct Rules are designed to promote
The Conduct Rules specify trade practices that are fair and ethical when dealing with the public. Events that must be reported are also described.
138
What does the Uniform Practice Code deal with?
The Uniform Practice Code deals with interactions with other broker-dealers.
139
What do the Conduct Rules deal with?
The Conduct Rules deal with a broker-dealer's (and representative's) relationship with the customer and the public.
140
What do the Conduct Rules deal with?
The Conduct Rules deal with a broker-dealer's (and representative's) relationship with the customer and the public.
141
What does the Code of Procedures deal with?
???
142
What does Code of Arbitration deal with?
???
143
An investor has a cash account with $300,000 in securities and $40,000 in cash. The investor also has a restricted long margin account containing securities with a market value of $220,000 and equity of $60,000. What is the extent of this investor's Securities Investor Protection Corporation (SIPC) coverage?
Coverage under SIPC may not exceed $500,000 in cash and securities, of which up to $250,000 may be cash. In the cash account, his coverage is $300,000 in securities plus $40,000 in cash. In the long margin account, the coverage is only the equity, which is $60,000. Total: $300,000 + $40,000 + $60,000 = $400,000.
144
What are the 4 parts of Financial Industry Regulatory Authority (FINRA)'s manual regarding employee conduct and reportable events?
Conduct Rules, the UPC, the Code of Procedure, and the Code of Arbitration Procedure
145
broker-dealer firm's registration to do business in a given state may be revoked by
the state’s administrator.
(Actions taken against a broker-dealer in a specific state will be taken by that state's securities administrator. The Federal Reserve and the SEC are national level regulators and any actions taken will not be state specific.)
146
The law that provides the legal framework for state registration of securities is
USA, Uniform Securities Act
147
What is the Uniform Securities Act?
The Uniform Securities Act provides a legal framework for the state registration of securities, as well as the registration requirements applicable to broker-dealers, investment advisers, investment adviser representatives, and registered representatives.
