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Series 7 > Rules & Regs > Flashcards

Rules & Regs Flashcards

(64 cards)

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1
Q

Death docs

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

Insiders

A

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

Must file form 3 w/in 10 biz days

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3
Q

U4

A

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

Reg element - every 3 years
Firm element - every year

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4
Q

Restricted stock

A

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

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5
Q

Bearer bonds

A

1k or 5k, coupons, no name

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6
Q

Finra rule 5130 common stock restrictions and exemptions

A

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

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7
Q

Erroneous share report

A

Incorrect # of shares can reject

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8
Q

Record keeping requirements

A 
6 yrs - most acct stuff
5 yrs - SARs, ID's
4 yrs - complaints
3 yrs - everything
2 yrs - easily accessible
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9
Q

Maloney act

A

1938, created nasd, forerunner of finra

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10
Q

Sell out

A

Failure to pay by settlement date

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11
Q

Confirmation

A

Sent at or prior to completion of transaction

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12
Q

Settlement

A

Test yourself

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13
Q

Payment extensions for settlement can be provided by?

A

Finra, fed, any exchange

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14
Q

Account statements frequency

A

Active - monthly
Inactive - quarterly
Mutual fund - semi annual

AIM

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15
Q

Contemporaneous cost

A

Used for inactive , non competitive securities

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16
Q

COP - code of procedures

A

Method if resolving disputes, can be appealed

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

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17
Q

Penny stock

A

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
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18
Q

Prime brokerage

A

500k min or

100k min if with an IA

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19
Q

Simplified arbitration

A

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

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20
Q

Self regulatory organization SRO

A

Any exchange, nyse, finra, msrb

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21
Q

New acct signatures

A

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

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22
Q

AML reporting

A

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

$5k SAR

$3k - only need to record

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23
Q

Finra rule 5121 UW requirements for IPO

A

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

For non IPO offerings cannot use UW

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24
Q

Dividends regular way trade

A

But before the ex date to get divs

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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

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