Incorrect Test Questions Flashcards
Incorrect Final and Progress
When transacting business with clients in penny stocks, a broker-dealer is required to ____________will receive for the transaction and ____________ for the transaction. There is no requirement to disclose previous compensation from penny stock transactions with customers or the amount of compensation the execution system will receive from the transaction. (71149)
disclose both the compensation the broker-dealer
the compensation the registered representative will receive
The Nasdaq system operates on Eastern Time from:
The Nasdaq system operates from 4:00 a.m. to 8:00 p.m. each business day
A Nasdaq market maker must be open for business from
9:30 to 4:00
The market maker may voluntarily open for business prior to 9:30, or stay open for business after 4:00 p.m. If the market maker elects to stay open during these hours, it must comply with all applicable Nasdaq trading rules
A manager is reviewing the trading activities of one of her registered representatives (RRs) who has many clients with discretionary accounts. One client contends that the RR has been churning his account. To investigate the possibility of excessive trading in the account, the manager’s primary focus should be the:
The investment objectives of the client
the most important element in the process is to examine the investment objectives of the customer. Investment objectives are highly instrumental in guiding a registered representative and should always be considered prior to making any recommendations to the customer. Frequent trades may be acceptable in the account of a day trader, but are inappropriate for many other investors.
Initial Insiders must File Form 3 with the _____ within ______ calendar days
Changes in position, Insiders must file form 4 to report:
SEC within 10
Purchases and sales within 2 business days, not needed if within a 401(k) plan
Insiders are prohibited from
-engaging in short sales of their company shares
-selling uncovered calls
-retain short swing profits (<6months)
Insiders can buy
-calls
-protective puts
-covered calls
Rule 504 of Regulation D allows an issuer to offer securities of up to $____ in a 12-month period. Provided the issuer complies with all of the provisions of Regulation D, this private placement is ____ from SEC registration. The issuer is still required to file Form D with the SEC by no later than ____after the first sale of securities.
$10 million
exempt
15 days
Under Regulation D Rule 506, if the issuer offers securities exceeding $_____ and non-accredited investors are solicited, ________ must be provided.
10 million
a disclosure document
If an issuer of securities is required to file reports with the SEC, but is not eligible to use Form S-3, which of the following statements is TRUE?
The firm is permitted to use a free writing prospectus after the filing of a registration statement and the issuer must include a statutory prospectus.
A free writing prospectus (FWP) is any communication that does not meet the standards of a statutory prospectus.
Tender Offers:
Shareholders must be notified no later than ___ from the date the tender is made:
Mgt of subject company must advise its shareholders of their bias toward the tender no later than:
Must be held open for at least:
If adjusted, must remain open for another.
10 business days
10 business days
20 business days
10 business days
13d is filed within ____ after an acquistion
10 calendar days
To be considered a regulated investment company, a mutual fund must:
Must distribute a minimum of 90% of its investment income to its shareholders.
-allows the investment company to pass on distributions to shareholders without the company having to first pay taxes on the income distributed
A registered representative (RR) has full power of attorney for her father, but the RR’s father receives no material support from the RR. When the RR executes trades in her father’s account, who will receive copies of the trade confirmations?
When a representative has discretion in a customer’s account, trade confirmations are sent to both the account owner (i.e., the RR’s father) and the person who executed the trade
A broker-dealer’s Firm Element plan is _____ to be submitted for regulatory review
not required
To impose disciplinary action on a registered representative for breakpoint sales is regulated by
Code of Procedure
A Regulation A Tier 2 offering cannot exceed _______ and, of that ____, no more than _____ million may be for the benefit of selling shareholders. Regulation A Tier 1 offerings may not exceed $20 million and, of that $20 million, no more than $6 million may be for the benefit of selling shareholders.
$75 million over a 12-month period
that $75 million, no more than $22.5 million
Regulation A Tier 1 offerings may not exceed ____- and, of that ______, no more than _____ may be for the benefit of selling shareholders.
$20 million
$20 million
$6 million
Under current insider trading regulations, the SEC is allowed to pay bounties to informants on insider trading cases. The bounty can range from _____ of the violator’s penalty
10% to 30%
Market Maker A had an order to buy 500 shares at 32.10 on the Nasdaq Market Center Execution System book. The order was executed against Market Maker B, but was cancelled within 30 minutes of the execution. Which of the following statements is TRUE?
Market Maker B must cancel the trade report for the cancelled execution (broken trade). The cancellation of a trade report must be done by the firm that reported or was obligated to report the trade if an automated lock-in has been done (the executing firm or Market Maker B). In this instance, the trade report was automatically locked-in since the execution took place in the Nasdaq Market Center.
Outside of the Nasdaq Market Center, the party that would have been responsible for entering the trade report for the execution would be the market maker on the sell side (Market Maker B); therefore, it’s also responsible for canceling the trade report.
A Nasdaq-listed company is selling additional shares of stock that will be priced on Wednesday, July 15. A person who is purchasing the additional shares is NOT in violation of Rule 105 of Regulation M if she sold short the stock on which of the following dates?
July 7th
Rule 105 of Regulation M stipulates that it’s a violation for any person to sell short the security that’s the subject of an offering, and purchase the offered security from the underwriter if the short sale was executed during the period beginning five business days prior to the pricing of the offering and ending with the pricing of the issue. The five-business-day period begins on Wednesday, July 8.
A promissory note is:
A debt security that’s used by companies to raise capital
Promissory notes are debt securities that are used by companies to raise capital and they may be either registered or unregistered. Promissory notes are often sold by unregistered sellers which raises significant regulatory concerns, including promises of high and guaranteed returns, schemes that target the elderly, and selling away violations.
A customer gave an order to buy 400 shares of stock at $37 in his margin account. In error, the order was executed for 4,000 shares. The stock is currently trading @ 37.25. The RR should:
Inform a principal of the error.
The customer is not required to accept more than 400 shares. Canceling the entire order is not the right course since the client is entitled to 400 shares @ 37 or better.
Liquidating the additional 3,600 shares may expose the client to a free-riding situation.
According to Regulation M, during the restricted period of a distribution:
Underwriting participants may purchase the subject security if it’s actively traded.
