Part 2: Supervise the Opening and Maintenance of Customer Accounts, Associated Persons, and Personnel Management Activities Flashcards
(105 cards)
1
Q
The USA PATRIOT Act requires that member firms maintain records of reports of currency transactions involving more than $10,000 for how many years?
A
5 years
2
Q
In a margin account, SIPC coverage extends to ___
A
Equity
3
Q
If a customer deposits fully paid listed securities into his margin account, SMA will increase by __% of the market value
A
50%
4
Q
Customer account statements must be kept for ___ years
A
6
5
Q
CTR records must be kept for ___ years
A
5
6
Q
A CTR must be filed within ___ days of receipt of the currency
A
15 days
7
Q
A CTR is filed for any currency received that is $___ or more on a single day
A
$10,000
8
Q
SAR’s should be filed for any transaction that alone or in aggregate equals $___ or more
A
$5,000
9
Q
Firms must file a SAR within __ calendar days of becoming aware of the suspicious transaction
A
30
10
Q
The Patriot Act requires firms to make and retain records relating to wire transfers of ___ or more
A
$3,000
11
Q
A ____ account is one in which payment for securities purchased or delivery of securities sold is to be made by an agent bank
A
DVP/RVP
12
Q
By signing this form, the customer allows the member to use the customer’s securities as collateral for a loan
A
Hypothecation agreement
13
Q
This agreement explains how the member will compute the interest to be charged for the money borrowed to finance the purchaser
A
Credit agreement
14
Q
Which margin form is optional for a client to sign?
A
The loan consent agreement, which allows the member to loan out the customer’s margin securities for short sales
15
Q
The amount of customer securities that can be pledged to a bank for a loan is limited to ___% of the customer’s debit balance
A
140%
16
Q
A margin account is restricted if it has fallen below __% equity in the account
A
50%
17
Q
What is created if the market value of securities purchased in a long margin account rises above the initial cost?
A
A Special Memorandum Account (SMA)
18
Q
Is SMA equity or cash?
A
Neither! It is a line of credit.
19
Q
What is the equation to compute maintenance market value?
A
Debit Balance / 0.75
20
Q
How often must the easy-to-borrow list be updated?
A
Daily
21
Q
Banks acting as muni securities dealers are audited at least once every __ years
A
2
22
Q
Which act created the MSRB?
A
The Securities Act Amendments of 1975
23
Q
What 4 things are municipal fund securities exempt from?
A
Registering with the SEC, preparing a prospectus & statement of additional information, daily calculation of NAV, and establishing a board of directors
24
Q
For periodic municipal fund security plans: how often must statements be sent?
A
Quarterly
25
For non-periodic muni fund security programs, how often must statements be sent?
Monthly
26
How soon must statements be provided after the reporting period?
Within 5 business days
27
Which license must a person have to sell municipal fund securities?
Either the 6, 7, or 52
28
What is the income restriction for contributing to 529 plans?
None!! No eligibility restriction.
29
What is the age restriction for a 529?
None! If at any age the individual goes to school, they may use the 529 plan
30
If a customer requests info about a trade, the muni firm must respond within ___ business days
5
31
If a customer requests information about a trade more than 30 days after the trade date, the firm has __ business days to respond
15
32
How often must customers be sent a statement that a copy of the investor brochure can be found on the MSRB website?
Annually
33
Complaints must be maintained for __ years
6
34
The resolution of any complaint must be approved by either a _________ or _________
Series 53 (municipal principal) or Series 10 (municipal sales principal)
35
Which document is posted on the website of the MSRB and describes the protections provided by the Board and how to file a complaint?
The Investor Brochure
36
FINRA Rule 6730 requires trades to be reported within _____ minutes of a trade executed during TRACE system hours
15
37
Interest accrues up to, but not including the ________ date.
Settlement
38
For 529's: Plan-to-plan rollovers for the same beneficiary are allowed how often?
Once every 12 month period
39
A municipal dealer is obligated to disclose what on a confirmation of a trade to a retail customer?
The total prevailing market price (PMP), the markup, and the markup percentage
40
Rule G-30: all prices in muni bond transactions must be fair and reasonable and take into account the following:
1. Fair market value
2. Expense of effecting the transaction
3. Total $ amount of transaction
4. Availability of security (liquid or thinly traded?)
5. Expense of executing the order
6. Value of services rendered by the BD
7. Amount of any other compensation received with the transaction
41
A municipal securities dealer that receives an interest payment claim must send a check for the interest no later than ___ business days after receipt.
10
42
Rule G-32 requires that any dealer (not just the underwriter) selling municipal securities to a customer during the issue's underwriting period must deliver the official statement in final form, if any, to the customer by ________________
the settlement date of the transaction.
43
Which act is referred to as the Full Disclosure Act, the Paper Act, the Truth in Securities Act, and the Prospectus Act?
The Securities Act of 1933 (33 rhymes with tree, trees make paper. Paper act)
44
MSRB Rule G-32 requires that upon request, the broker-dealer must deliver an official statement to a customer within _______ or ______, whichever is later.
one business day or the settlement of the transaction, whichever is later
45
__________ is the date on which interest begins to accrue for new municipal issues.
The dated date
Note: the dated date's use ends when the bond makes its first interest payment.
46
The RTRS business day is _________, Monday through Friday.
7:30 am–6:30 pm ET
47
An expression that describes share prices in short-term, liquid, debt security pools (like mutual funds) falling below the standard of $1 per share is ________
breaking the buck.
48
Confirmation of a regular way municipal securities trade between dealers must be mailed ________
on or before the business day following the trade date. (T or T+1)
49
A member firm sends to a customer an initial privacy notice that contains an opt-out provision. The firm may not disclose nonpublic, personal information about that customer for how many days from mailing?
30 days
50
Regulation S provides a safe harbor for U.S.-based issuers that sell securities where?
Outside the US
51
What 3 things must a RR do when they learn of a customer's death?
1. Freeze the account by marking it as Deceased
2. Cancel any open order
3. Await for the legal documents (death cert, letters of administration, etc.)
52
Issuers wishing to avail themselves of the private placement exemption offered under Regulation D of the Securities Act of 1933 must file a Form D with the SEC no later than ___ days after the first sale.
15
53
A __________________ contained in the letter of intent executed by both the syndicate manager and the issuer, allows the syndicate manager to back away from a firm commitment if an event occurs affecting the investment merit of the securities.
market-out clause
54
The costs associated with forwarding proxy material to the beneficial owners of stock held in street name are paid by the ______.
issuer
55
Regulation A requires that an offering circular be provided to purchasers at least ___ hours in advance of sales.
48
56
What occurs in a partnership account if one partner dies?
The account is frozen until a new or amended partnership agreement is received.
57
Under Regulation A, the maximum Tier 2 offering by an issuer cannot exceed _______ during any 12-month period.
$75 million
58
In an active, competitive market, the markup on stock sold as principal to a customer is based on the ________
inside offer
59
_________ violate trading rules because they create the illusion of trading volume where such volume would not otherwise occur.
Matched orders
60
A municipal security subject to an in-whole call must be identified as called at or before the _____ date.
trade
61
For exemption from the prospectus delivery requirements or registration requirements under the Securities Act of 1933, commercial paper must mature in __ months or less.
9
62
If a customer deposits fully paid listed securities into his margin account, SMA will [increase/decrease] by __% of the market value
increase by 50% of the market value
63
The MSRB allows a few things to be changed by mutual agreement between dealers: ____, ____, & ____.
buy-in, sellout, and settlement dates
64
When would a trade confirmation be issued without a yield?
If the trade was effected at par value
65
Can an UGMA account be opened as a margin account?
No.
66
Advertisements for private placements are only allowed if the advertising is limited to _________________. [Rule 506(c)]
potential qualified investors
67
Your FINRA member firm has determined that a person seeking to open an account is on the Office of Foreign Assets Control's (OFAC) list. Who must oversee your firm's dealings, if any, with this individual?
An officer of the firm with responsibility in this area.
68
Does the dated date appear on a confirmation for a security that has made its first interest payment?
No.
69
If an in-whole call occurs after the trade date, the seller _____________
must deliver the called bond. The buyer must accept delivery.
70
Under SEC rules, the max number of shares that can be sold by an affiliate in any 90-day period is the greater of: ______ or ________
1% of the issuer's total shares outstanding or
the weekly average of the prior 4 weeks trading volume
71
Copies of exception reports must be maintained for ___
18 months.
72
The regulation of insider trading is covered under the Act of ___
1934
73
Mutilated certificates are considered good delivery if validated by one of the following:
trustee, registrar, transfer agent, paying agent, or issuer
74
The MSRB requires the following be placed on an agency order ticket:
time of receipt (NOTE: this is diff. than time order was entered), date of receipt, and execution price.
75
If the mark-to-the-market demand for a cash deposit is sent by one broker to another, the required amount of cash must be deposited
ASAP... as promptly as possible.
76
Firms are required to identify to ____ the individual charged with oversight of the firm's anti-money-laundering program.
FINRA
77
The FINRA customer limit order protection rule, known as the _____________, applies to Nasdaq, third market, exchange-listed, and OTC securities.
Manning Rule
78
A new issue becomes marginable (if determined by the Fed) only after it has traded in the secondary market for __ days.
30
79
In the first transaction in a margin account, the following rules apply: if the first trade is less than $2,000, the customer must deposit ___% of the purchase price; if the first trade is between $2,000 and $4,000, the customer must deposit $2,000.
100%
80
SIPC distributes securities or cash to satisfy the claims of the firm's customers. The value of customers' securities is the value at the close of the business day when the firm _______
filed for protection.
81
The 5% policy (Rule 2121) does NOT apply to _______ or _______ (and give examples)
exempt securities (i.e. muni bonds)
or
prospectus offerings (i.e. new issues, MF's, variable annuities, DPPs)
82
If claim is made within 60 days of the interest payment date, payment must be made within __ business days of receipt of the claim. The period would be extended to __ business days if the claim were received more than 60 days from the interest payment date.
10; 20
83
A Regulation A Tier 2 offering exemption allows issuers to sell up to $75 million of securities without going through a full-blown registration. A Regulation A offering is sometimes called the small offering exemption. The $75 million ceiling is measured over a __ month period.
12
84
_____ is an attempt to fall under the $10,000 radar to avoid a CTR filing by the receiving institution.
Structuring
85
On a confirmation for a premium bond, the yield to ____ will be shown
call
86
On a confirmation for a discount bond the yield to ___ will be shown
maturity
87
Broker-dealers must update customer account information every __ months.
36
88
Rule 504 provides a safe harbor from full registration for private placements in which the dollar amount to be sold is $_____ or less.
$10 million
89
___ require complete financial disclosure because of minimum suitability standards set by the states in which they are sold
DPP's
90
The request for adjustment or nullification must be made within __ minutes of the execution. Any appeal of Nasdaq's decision must be made within __ minutes of receiving the decision.
30; 30
91
Appeals of any written determination by Nasdaq regarding a clearly erroneous trade must be made within 30 minutes to the ____.
MORC
92
Seller's (and buyer's) option trade settlements are made no earlier than __ business days after the trade date
3
93
If an event affects the investment merit of a security during the registration process, the syndicate may invoke the _______
market-out clause
94
True or False:
A member firm must put FINRA's name on its website
False. It may but it is not obligated to.
95
Issuers wishing to avail themselves of the private placement exemption offered under Regulation D of the Securities Act of 1933 must file a Form D with the SEC no later than __ days [after/before] the first sale.
15 days after
96
_________ is used to report currency deposits of more than $10,000 occurring on a single business day.
FinCEN Form 112
97
Under SEC rules, customer account records must be maintained for __ years following the closing of an account.
6
98
True or False:
If a discretionary order is placed, this must be indicated on the confirmation.
False: If the trade was discretionary, this must be noted on the order ticket, not on the confirmation.
99
True or False:
The customer name and address are on an order ticket
False.
100
Passive losses, such as those generated by limited partnership investments, are deductible against ______
passive income
101
All of the participants in the municipal securities industry are governed by the rules of the MSRB with the exception of municipal securities _____.
issuers
102
Which municipal bonds is most suitable for an IRA?
Private activity
103
Regulation A requires the distribution of an ________
offering circular.
104
The Securities and Exchange Commission (SEC) is authorized under federal law to suspend trading in any stock for a period of up to ___ business days
10
105
A Section 529 plan participant cannot include repayment of student loans for amounts greater than $_____ as a qualified educational expense.
$10,000
