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Series 7 > Rules & Regs > Flashcards

Flashcards in Rules & Regs Deck (64):
1

Death docs

1. Affidavit of domicile
2. Death certificate
3. Letters testamentary
4. Inheritance tax waiver

2

Insiders

10% owners or
Access to non public info, and immediate family

Must file form 3 w/in 10 biz days

3

U4

Changes notified w/in 30 days, valid for 2 yrs,

Reg element - every 3 years
Firm element - every year

4

Restricted stock

Stock held by insiders, issued Privately. 6 month holding time frame

5

Bearer bonds

1k or 5k, coupons, no name

6

Finra rule 5130 common stock restrictions and exemptions

Common stock IPO, cannot be sold to restricted persons: brokerage firms, ee's of the former, immediate family, attorneys/accountants that helped w/ UW, PM's, insiders of BD's, investment club owners

Exemptions: ee's, subsidiaries, customers, creditors, suppliers, of the issuer

Does not apply to:
Exempt securities, investment co's, preferred stock, bonds, adr's, dpp's, primary, secondary, combo

7

Erroneous share report

Incorrect # of shares can reject

8

Record keeping requirements

6 yrs - most acct stuff
5 yrs - SARs, ID's
4 yrs - complaints
3 yrs - everything
2 yrs - easily accessible

9

Maloney act

1938, created nasd, forerunner of finra

10

Sell out

Failure to pay by settlement date

11

Confirmation

Sent at or prior to completion of transaction

12

Settlement

Test yourself

13

Payment extensions for settlement can be provided by?

Finra, fed, any exchange

14

Account statements frequency

Active - monthly
Inactive - quarterly
Mutual fund - semi annual

AIM

15

Contemporaneous cost

Used for inactive , non competitive securities

16

COP - code of procedures

Method if resolving disputes, can be appealed

Order of appeal: panel, nac, sec, fed, supreme

17

Penny stock

Valued at less than $5, can only be OTC

Risk disclosure doc required for ALL purchases

Suitability statement signed by customer except:
Accredited investor
Unsolicited
Established cust
BD transaction

18

Prime brokerage

500k min or
100k min if with an IA

19

Simplified arbitration

Member vs non member, less than 50k, 1 person panel

20

Self regulatory organization SRO

Any exchange, nyse, finra, msrb

21

New acct signatures

Rep - no
Customer - no (unless margin)
Principal - yes

22

AML reporting

Report the following:
$10k - submit to CTR to fincen form 112

$5k SAR

$3k - only need to record

23

Finra rule 5121 UW requirements for IPO

Regulates issue of securities for IPO, must use qualified UW, 3 issues, 3 yrs, 3 same size

For non IPO offerings cannot use UW

24

Dividends regular way trade

But before the ex date to get divs

25

Finra rule 2111
3 components of suitability

1. Reasonable basis - some investors
2. Customer specific - one customer
3. Quant suitability - series of transactions

26

Markdown

Sell at the bid

27

Transfer agent

Managed certificates, responsible for good delivery, sends divs, sends proxies

28

Inspections

Osj annually
Branch 3 yrs
Min branch periodic

29

Dividends cash trade

Buy on or before record date

30

Finra fees
Assessment vs. Fee

Assessment on transactions

Fees on # of branches and reps

31

Sarbanes Oxley

2002, regulates reporting of issuers, separation of bankers and analysts, CEO and CFO certify all fin reports

Only security registration also requires majority of board

32

Deadline to settle trades

35 days but funds must be in bank acct w/in 5 days

33

Trades subject to 5% policy

1. Principal - dealer charges markup/markdown
2. Agency - broker charges a commission
3. Risk less - simultaneous, firm buys own inventory for resale
4. Proceeds - sell used to buy

34

A-CAT

Written notice to distributing firm, one day to verify, 3 days to send

35

Simplified industry arbitration

Member vs member, less than 50k, 1 person panel

36

Insider trades

SEC form 4 w/in 2 biz days after trade

37

Trades exempt from 5% policy

1. New offerings, IPO, primary, secondary, combined
2. Member to member
3. Exempt securities

38

Institutional lit

No need for filing or principal approval

39

Advertisements

Non targeted

40

Net capital

Minimum requirement, calculated monthly, on balance sheet

41

Registrar

Maintains list of shareholders, ensures issued shares don't exceed authorized

42

Buy in

Failure to deliver certs

Acct frozen 90 days

43

Rule 144 control stock restrictions

Control stock restriction
Can sell up to 1% of outstanding shares or avg trading volume of last 4 weeks, whichever is Greater

Only pertains to selling of shares

44

Erasure guarantee

A form of power of substitution used for incorrect spelling of name

45

Erroneous report rule

Discrepancy on price between report and transaction must be accepted

46

Fully registered bonds

1k up to 100k, no coupons, named

47

Dividend calendar

DERP
2 days between ex and record

NYSE sets the ex date, board of directors does the rest

Divs and splits reported to finra/sec w/in 10 biz days prior to record date

48

Finra investor education and protection rule

Provided annually, finra website and address, disclosure hotline, stmt of availability

49

Insider trades exemptions

Prearranged trading plan
Cannot short sell
Can sell at loss or Breakeven

50

Markup

Buy at the ask

51

Inside info

Released simaltaneously via media, including social or SEC form 8k, w/in 4 days of event

52

Control stock

Stock held by insiders, purchased Publicy

53

UGMA

Think Generic, $1050 tax free, $1050 taxed at minor rate of 10%, rest taxed to guardian

54

SEC

Created 1934, regulates investors, issuers, b/d,

55

5% owners

File form 13-D with SEC w/in 10 days
Plus each time 1% increase until 10%

56

Relevant factors for finra 5% guideline

PEAS

Price
Expense
Availability
Size

57

Contemporaneous price

Used for inactive, competitive securities

58

Good delivery - lots

Must be multiples, divisors or add up to 100

59

Lit filing requirements

Most require filing w/in 10 biz days AFTER 1st use

Exemptions:
Tombstone
No recommends
Recruiting
Already filed

60

Sales ads

Targeted

25/30

61

Principals approve:

New accts
Advertising
Complaints
Trades

62

DERP

Record date is 2 days after ex

63

Suitability factors

All of the above excluding educational

64

Min junk fax fine

$500 per page