FINRA violations Flashcards
(25 cards)
What is Commingling of funds?
Combining a customer fully paid and margined securities or combining a firms securities with customer securities
What is Interpositioning ?
Having two firms act as agents so they earn commissions.
What is Giving or receiving of gits?
receiving a cash gift from a client for over $100, hotels, food, travel, sports not included
What is the rule for Making political contributions?
Investment advisors may not give advice to politicians after contributing within 2 years.
What is the rule for Falsifying or withholding documents?
firms cannot make up information to any SRO
What is the rule for Signatures of convenience?
Forging a customer signature even w their approval
What is the rule for Guarantees?
Cannot make guarantees around loss in any security
What is the Improper use rule?
members and associates are prohibited from making improper use of a clients assets
What is Freeriding ?
Allowing a customer to buy and then sell a security without paying for the purchase. The account is restricted for 90 days the investor can only trade with settled cash, credit privileges are suspended.
What is Backing away?
failure of a securities dealer to honor a firm quote
What is Churning ?
excessive transactions that generate commissions
What is the use of manipulative, deceptive, or other fraudulent devices ?
Members may not solicit a sale through fraudulent, deceptive, manipulative means.
What is Trading ahead of research reports?
Members may not place their order ahead a private research report is made public
What is Trading ahead of customer orders?
Members may not place their order ahead of a customer’s order, this will cause the client to get a worse trade price
What is Frontrunning ?
Knowingly executing a trade ahead of a block trade (10k or more shares)
What is Prearranging trade?
Illegal deal between a client and broker to buy back at a fixed price
What is Paying for referrals?
A violation occurs when a member firm pays a non member with cash or other compensation for a referral
What are Market rumors?
Members may not spread rumors that cause investors to buy or sell
What is Pump and dump?
The act of artificially inflating a stock price to then sell it and screw over investors.
What is Excessive trading?
Traders placing a buy and sell order on the same security to make it seem like it is more active than it is
What is Marking the open/ Marking the close?
Making excessive trades during the start or end of the trade day to manipulate the price
What is Matching orders?
Manipulating the price of a security by trading it back and fourth to make it seem more in demand
What is Painting the tape?
making misleading reports of the trades of a security
What is Paying the media?
paying the media to influence stock price or activities
