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1

Recordkeeping
Question ID: 48510
Blotters prepared by a broker/dealer under SEC Rule 17a-3 must contain entries reflecting all of the following EXCEPT:

A) receipts and deliveries of securities.
B) receipts and disbursements of cash.
C) dividends and interest received.
D) purchases and sales of securities.

Answer: C

Under SEC Rule 17a-3, the required blotters (records of original entry) are receipts and deliveries of securities, receipts and disbursements of cash, and purchases and sales of securities. The record of dividends and interest received is defined as a subsidiary record, not as a blotter.

Reference: 2.1.3.1 in the License Exam Manual.

2


Recordkeeping
Question ID: 48511
SEC Rule 17a-3 requires a broker/dealer to maintain records that reflect:

I. separate itemized ledgers for each cash and margin account of each customer.
II. separate itemized ledgers for each cash account of the member firm and its partners.
III. combined ledgers for all cash accounts of the broker/dealer's customers.
IV. combined ledgers for all cash and margin accounts of the broker/dealer's customers and the broker/dealer's own account.

A) II and IV.
B) III and IV.
C) I and II.
D) I and III.

Answer: C

Under SEC Rule 17a-3, a separate record must be kept for each cash and margin account for every customer or proprietary account.

Reference: 2.1.1 in the License Exam Manual.

3

Recordkeeping
Question ID: 48512
A broker/dealer registered with the SEC for 10 years would be required to have on file:

A) copies of all communications sent to customers since the firm started its business.
B) copies of bank statements and cancelled checks for the past 7 years.
C) customer order memorandums from the first 3 years.
D) its charter or articles of incorporation.

Answer: D

Articles of incorporation must be retained for the life of the firm. Customer communications, bank statements, and cancelled checks must be retained for 3 years.

Reference: 2.1.2 in the License Exam Manual.

4

Recordkeeping
Question ID: 48513
All records, whether required to be maintained for three or six years, must be readily accessible for the most recent:

A) one year.
B) 3 years.
C) two years.
D) six months.

Answer: C

The most recent two years worth of records must be readily accessible.

Reference: 2.1.1.3 in the License Exam Manual.

5

Recordkeeping
Question ID: 48514
For how long must a memorandum of every brokerage order indicating the terms and conditions be maintained?

A) Six years.
B) Seven years.
C) Lifetime of the firm.
D) Three years.

Answer: D

Brokerage office order memoranda (order tickets) must be kept for three years.

Reference: 2.1.4.1 in the License Exam Manual.

6

Recordkeeping
Question ID: 48515
For how long must ledgers reflecting securities failed to receive and securities failed to deliver be maintained?

A) Lifetime of the firm.
B) Three years.
C) Six years.
D) Seven years.

Answer: B

Subsidiary ledgers, such as securities failed to deliver and failed to receive, must be kept for three years.

Reference: 2.1.4.7 in the License Exam Manual.

7


Recordkeeping
Question ID: 48516
Purchase and sale of securities must be posted to a broker/dealer's blotter no later than the:

A) business day following the trade date.
B) trade date.
C) settlement date.
D) business day following the settlement date.

Answer: A

Blotters and other records of original entry must be posted no later than the business day following the day of the event. Therefore, a purchase or sale must be posted no later than the day after trade date.

Reference: 2.1.3.1 in the License Exam Manual.

8

Recordkeeping
Question ID: 48517
When a broker/dealer introduces and clears its trades through another broker/dealer on a fully disclosed basis, the responsibility for maintaining the records relating to the customers' accounts rests with:

A) the nonclearing broker/dealer.
B) the clearing broker/dealer.
C) both the nonclearing and the clearing broker/dealer.
D) the fully disclosed broker/dealer

Answer: C

Because the clearing broker/dealer (which carries the customer accounts on a fully disclosed basis) holds the customers' funds and securities and executes the trades in those accounts, the clearing broker/dealer is responsible for keeping the records relating to the customer accounts under SEC Rule 17a-3. This does not exempt the introducing broker from maintaining certain records. The introducing broker keeps those records not customarily kept by the clearing broker/dealer.

Reference: 2.1.4.18 in the License Exam Manual.

9

Recordkeeping
Question ID: 48519
According to SEC Rule 17a-5, a trial balance must be prepared by broker/dealers at least:

A) daily.
B) weekly.
C) quarterly.
D) monthly.

Answer: D

SEC 17a-5 requires broker/dealers to prepare trial balances monthly.

Reference: 2.1.4.12 in the License Exam Manual.

10

Recordkeeping
Question ID: 48543
For how long must a FINRA member firm keep a record of written customer complaints?

A) Six years.
B) Lifetime of the customer's account.
C) Three years.
D) One year.

Answer: C

According to FINRA, records of customer correspondence, including written customer complaints, must be kept for three years.

Reference: 2.1.4 in the License Exam Manual.

11

Recordkeeping
Question ID: 48546
Power of attorney authorizing discretionary trading in an account must be retained for how many years after the account is closed?

A) Three years.
B) One year.
C) Two years.
D) Four years.

Answer: A

Power of attorney for discretionary accounts must be kept three years after the account is closed. Other account records such as the new account form must be retained for six years.

Reference: 2.1.4.10 in the License Exam Manual.

12

Recordkeeping
Question ID: 48547
Blotters are prepared by member firms:

A) weekly.
B) monthly.
C) quarterly.
D) daily.

Answer: D

Blotters (also known as day books) are daily records of activity, such as cash receipts and disbursements, purchase and sales records, and securities receipts and deliveries.

Reference: 2.1.3.1 in the License Exam Manual.

13

Recordkeeping
Question ID: 48559
Under SEC rules, subsidiary ledgers must be retained for:

A) 6 years.
B) 3 years.
C) 18 months.
D) 1 year.

Answer: B

Under SEC rules, all subsidiary records must be retained for 3 years. General ledgers are 6-year records. The majority of records must be maintained for 3 years.

Reference: 2.1.4 in the License Exam Manual.

14

Recordkeeping
Question ID: 48566
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) 6 years.
B) 5 years.
C) 1 year.
D) 3 years.

Answer: B

The USA PATRIOT Act requires that all currency transactions involving more than $10,000 are reported on FinCEN Form 104 and that these forms are maintained for 5 years. Normally, SEC rules for records of this type require a 3-year maintenance period. However, the SEC states in Rule 17a-8 that a longer recordkeeping requirement by another federal body will supersede the SEC requirement (in this case, the Department of the Treasury).

Reference: 2.1.4.19 in the License Exam Manual.

15

Recordkeeping
Question ID: 48590
All of the following records must be retained for 6 years EXCEPT:

A) the general ledger.
B) the stock record.
C) FOCUS reports.
D) blotters.

Answer: C

The 6-year records include blotters, the general ledger, the stock record, customer ledgers, and customer account information. FOCUS reports are kept for 3 years.

Reference: 2.1.3 in the License Exam Manual.

16

Recordkeeping
Question ID: 48595
Records relating to terminated representatives must be retained for how many years?

A) One year.
B) Five years.
C) Six years.
D) Three years.

Answer: D

Records generated by and about terminated representatives are among those records retained for three years.

Reference: 2.1.4.13 in the License Exam Manual.

17

Recordkeeping
Question ID: 48604
Under SEC rules, all of the following records must be retained for 3 years EXCEPT:

A) trial balances.
B) general ledger.
C) subsidiary ledgers.
D) order tickets.

Answer: B

The 6-year records include blotters, the general ledger, the stock record, customer ledgers, and customer account information.

Reference: 2.1.4 in the License Exam Manual.

18

Recordkeeping
Question ID: 48637
All of the following records must be retained for 3 years EXCEPT:

A) fingerprint cards for terminated personnel.
B) customer statements.
C) copies of advertising.
D) audio tapes of orders handled by the trading room.

Answer: B

Customer statements must be retained for 6 years. The other choices are all 3-year records.

Reference: 2.1.4 in the License Exam Manual.

19

Recordkeeping
Question ID: 48640
A broker/dealer has been in business for 5 years. Which of the following records must be on file for this entire period?

General ledger.
Customer account statements.
Customer confirmations.
Bank statements.
A) I and III.
B) II and IV.
C) III and IV.
D) I and II.

Answer: D

6-year records include blotters, stock records, general ledgers, customer ledgers (statements), and customer account information.

Reference: 2.1.3 in the License Exam Manual.

20

Recordkeeping
Question ID: 48656
A customer of a member transfers his account to another member firm. Under SEC rules, the member must maintain copies of the customer's account records for how many years following the transfer?

A) Five years.
B) Six years.
C) Two years.
D) Three years.

Answer: B

Under SEC rules, customer account records must be maintained for six years following the closing of an account.

Reference: 2.1.3.4 in the License Exam Manual.

21

Recordkeeping
Question ID: 48685
According to SEC 17a-3, when must fail to receive and fail to deliver ledgers be posted?

A) TD+2.
B) SD.
C) SD+2.
D) TD.

Answer: C

The recordkeeping rules require that fail to receive and fail to deliver ledgers be posted within 2 business days of settlement date.

Reference: 2.1.4.7 in the License Exam Manual.

22


Recordkeeping
Question ID: 48686
Under 17a-3, blotters and other records of original entry include which of the following?

P/S Securities.
Div/Int Received.
R/D Cash.
SB/SL.
A) I and III.
B) I and II.
C) I, III and IV.
D) I, II, III and IV.

Answer: A

Records of original entry include the primary records of broker/dealers involving receipts and disbursements of cash and securities. They must be on file for six years. Dividends and interest received, and stock borrowed and stock loaned are subsidiary ledgers and must be kept on file for three years.

Reference: 2.1.3.1 in the License Exam Manual.
icense Exam Manual.

23

Recordkeeping
Question ID: 48694
Under SEC 17a-4, which of the following records must be kept for six years?

Customer ledgers.
Trial balances.
Stock records.
SIPC assessment records.
A) I and III.
B) II and III.
C) I, III and IV.
D) I and II.

Answer: C

Trial balances must be kept for three years.

Reference: 2.1.3 in the License Exam Manual.

24

Recordkeeping
Question ID: 48709
Under 17a-3, blotters or other records of original entry must be posted no later than:

A) TD + 4.
B) SD.
C) TD + 1.
D) TD.

Answer: C

Records of original entry are required to be posted no later than the business day after the event.

Reference: 2.1.3.1 in the License Exam Manual.

25

Recordkeeping
Question ID: 48711
Under Rule 17f-2, which of the following employees must be fingerprinted?

I Registered representatives
II Registered principals.
III Clerical employees handling monies or securities.
IV Clerical employees preparing customer statements.
A) II, III and IV.
B) I, II, III and IV.
C) I, II and III.
D) II and III.

Answer: C

Fingerprinting is required for persons who transact business with the public, or handle customer money or securities. Registered representatives and principals must always be fingerprinted; clerks also fall within the requirement if they handle money or securities.

Reference: 2.1.4.14.1 in the License Exam Manual.

26

Recordkeeping
Question ID: 48717
Under SEC rules, customer ledgers must be posted no later than:

A) SD + 1.
B) SD.
C) TD.
D) TD + 1.

Answer: B

Customer transactions must be posted to the customer ledger no later than the settlement date of the transaction.

Reference: 2.1.3.4 in the License Exam Manual.

27

Recordkeeping
Question ID: 48720
The short side of the stock record reflects:

A) fails to receive.
B) location of securities.
C) ownership of securities.
D) fails to deliver.

Answer: B

The long side of the stock record identifies ownership of securities held for customers. The short side reflects the location of the securities.

Reference: 2.1.3.3 in the License Exam Manual.

28

Recordkeeping
Question ID: 48721
Alpha broker/dealer serves as a clearing agent for Beta broker/dealer on an omnibus basis. Beta directs all of its securities executions to Delta broker/dealer. Which firm is responsible for recordkeeping under 17a-3?

A) Alpha.
B) Alpha and Beta.
C) Delta.
D) Beta.

Answer: D

The clearing firm is generally responsible for recordkeeping of customer securities in a fully-disclosed relationship. However, the introducing broker/dealer is responsible if an omnibus arrangement is in place. In an omnibus arrangement, all securities trades are cleared through one master account. The introducing broker/dealer is responsible for the recordkeeping of individual customer accounts.

Reference: 2.1.4.19 in the License Exam Manual.

29

Recordkeeping
Question ID: 48723
The general ledger of a broker/dealer must be posted monthly but no later than:

A) 17 business days after month-end.
B) the 15th of the following month.
C) 10 business days after month-end.
D) 5 business days after month-end.

Answer: C

Broker/dealer general ledgers must be posted once each month, no later than 10 business days after month-end. All firms are also required to prepare a monthly trial balance within 10 business days of the end of the month.

Reference: 2.1.3.2 in the License Exam Manual.

30

Recordkeeping
Question ID: 48768
Broker/dealers must prepare trial balances at least:

A) quarterly.
B) monthly.
C) weekly.
D) daily.

Answer: B

All brokerage firms are required to prepare, not file, monthly trial balances.

Reference: 2.1.4.12 in the License Exam Manual.