Series 6 Chapter 9

A BD that offers or intends to offer an investment analysis tool must provide FINRA access to the tool within

10 days after first use and file any template for written reports or retail communications regarding the tool.

Copies of these communications must be filed with FINRA within

10 days of first use.

. While illustrations on variable life policies are permitted, the maximum growth rate that may be shown to a customer in an illustration is

12%, provided the customer is also given a zero-growth scenario.

The hearing panel notifies the accused member (respondent) of the complaint in writing, who then has ___________ to respond.

25 days

The broker-dealer must continue the recording program for at least __________ years and must comply with all federal and state law regarding recording of telephone conversations.

3

Correspondence and communications including: e-mails, instant messages, records of gifts

3 years

Broker-dealer communications are subject to spot check by FINRA for up to

3 years from last use

Records of retail communications must be maintained for

3 years from the date of last use

FINRA requires member firms to report specified events no later than ______________ after the firm has concluded that the firm or an associated person has violated any securities, insurance, or investment-related laws, rules, regulations or standards of conduct of a self-regulatory organization.

30 days

A record of the complaint must be retained for

4 years

Customer complaints

4 years

CTRs, SARs, Form CRS for IAs

5 years

Customer account records, blotters, municipal complaints, POAs, Form CRS for BDs

6 years

broker-dealer has ____ days to establish the procedure from the time of discovery or the date of notification by FINRA that the broker-dealer is subject to the rule.

60

A broker-dealer who triggers the telephone recording rule must begin recording within _________ days and must file ________________ reports with FINRA.

60 & quarterly

The wash sale window is a ______-day period:____ days prior to the sale at a loss, _____days after the sale, and the date of the sale itself.

61 , 30 & 30

All the following are considered an MSRB advertisement, except: A Official statement B Form letter C Summary of a preliminary official statement D Report

A Official statement Official statements or preliminary official statements are not considered MSRB advertisements.

predispute arbitration agreement

A customer who signs a ____________________ is voluntarily agreeing to arbitration and gives up their right to take their dispute to court and be handled through litigation

Disclosure Obligation

All required disclosures must be made, before or at the time of the recommendation, about the recommendation and the relationship with the retail customer. This obligation also includes material facts relating to any conflicts of interest involved with the recommendation.

30 days

Any awards that are determined must be paid within _______________ of the determination.

A client has inherited shares of XYZ fund from their grandmother. The grandmother paid $15 per share in 2015. At the time of the grandmother's death in 2021, the shares were valued at $25 each. The client redeems the shares 6 months later for $27 per share. What is the tax consequence of the redemption? A $2 per share, short-term capital gain B $2 per share, long-term capital gain C $12 per share, long-term capital gain D $12 per share, short-term capital gain

B $2 per share, long-term capital gain The cost basis for inherited securities is the value of the security on the decedent's date of death. The holding period is always considered long-term for the beneficiary.

A member firm is selling securities from their inventory and charging a markup, in what capacity is the firm acting? A Broker B Principal C Agency D Owner

B Principal When a broker-dealer acts in a dealer or principal capacity, they are buying or selling securities in their own account out of inventory. They must still treat their clients fairly in such trades and charge reasonable markups or markdowns.

All the following must submit to arbitration, except: A A supervisory principal of a member firm B A registered rep C A public customer D A member firm

C A public customer Customers are not bound by the arbitration unless they have signed an arbitration agreement. However, if a customer wishes to initiate an arbitration, they are legally entitled to do so, and the broker-dealer or representative must settle with the customer in arbitration.

Director of Arbitration.

Customers can always file a complaint by submitting written complaints to the ___________________

Retail communication is any printed or electronic communication directed to more than: A 30 retail investors in any 60 business days B 30 retail investors in any 30 days C 25 retail investors in any 10 business days D 25 retail investors in any 30 days

D 25 retail investors in any 30 days Retail communication is any printed or electronic communication directed to more than 25 retail investors in any 30-calendar day period.

Code of mediation

is an alternative to arbitration in which the parties try to settle the dispute without arbitration or the court system. Mediation proceedings may run concurrently with arbitration proceedings.

Mediation

is an informal, voluntary process and requires the parties involved to sign the FINRA Mediation Submission Agreement

public appearance

is any participation in a seminar, forum (including an interactive electronic forum), radio or television interview, or other public appearance or public speaking activity. Any scripts, presentation materials, or handouts are subject to FINRA communication rules. If the appearance is attended by more than 25 people, it is considered retail communication.

Retail Communication

is any printed or electronic communication directed to more than 25 retail investors in any 30-day period.

Institutional communication

is any printed or electronic communication that is directed only to institutional investors. Such investors include banks, trust companies, insurance companies, investment companies, employee benefit plans with at least 100 participants, government entities, investment advisers, and other broker/dealers and registered persons.

Advertising

is retail communication that is distributed via mass media; the broker-dealer has no control over who receives this material. Examples include newspaper ads and commercials on TV or radio.

Mediation proceedings

may run concurrently with arbitration proceedings.

associated person

must notify the employer within 30 calendar days of becoming an employee of the firm, and in return must receive written consent from the firm to continue to have the account. A notification must be sent to the carrying member regarding the associated person's new employment with the broker-dealer.

If an investor sells securities at a loss, and within ____ days before or after the sale, the investor acquires the same or substantially similar securities, then the investor has a "wash" sale and cannot deduct any losses. A 30 B 45 C 60 D 90

A 30 If an investor sells securities at a loss, and within 30 days before or after the sale, the investor acquires the same or substantially similar securities, then the investor has a "wash" sale. The investor cannot deduct losses from wash sales.

FINRA would consider which of the following retail communications? A A public seminar B A form letter to 24 people who are not currently customers C Tombstone advertisements D A letter sent to 30 different insurance companies

A A public seminar Only the public seminar is considered retail communication. Form letters to 25 or fewer individuals in a 30-day period are considered correspondence. Tombstone advertisements are neither correspondence nor retail communication. Insurance companies are institutional investors, so communications sent to them are not considered retail communications. Public seminars are defined as retail communications.

When must broker-dealers deliver the customer relationship summary form to retail customers? A At the time of making a recommendation of an account type, securities transaction, or an investment strategy involving securities B Within 10 days after any order being placed C Prior to any first meeting with any prospect D 30 days after an account opening

A At the time of making a recommendation of an account type, securities transaction, or an investment strategy involving securities Broker-dealers must deliver the customer relationship summary form (Form CRS) to retail customers at the time of making a recommendation of an account type, securities transaction, or an investment strategy involving securities. The document must be delivered before placing an order or opening an account for a retail customer.

What form provides retail investors with information about the relationship and services provided by BDs & IAs? A Form CRS B Form BD C Form CTR D Form 1099

A Form CRS The main purpose of Form CRS is to provide retail investors with easy to understand information about the relationship and services provided by the firm. This is intended to help the client compare services between firms and make more informed decisions.

All the following pieces of information are necessary to open an account, except: A If the individual ever worked for a publicly traded corporation B If the individual is a corporate insider C If the individual works for another broker-dealer D The citizenship of the individual

A If the individual ever worked for a publicly traded corporation To open an account, taxpayer identification is required, which means country of citizenship is essential information. Registered representatives must also ask customers if they are an officer, director, or shareholder of 10% or more of a publicly traded company (corporate insider). If a customer is employed by another broker-dealer, that must be noted on the account, as there are required procedures for these accounts.

The NOP Growth Fund would like to communicate in an advertisement that it is the #1 ranked growth fund out of 1,700 funds. Under which of the following circumstances is this permissible? A If the ranking was created and published by a ranking entity B If the performance measurements are reviewed by an independent statistician C Under no circumstances D With approval of FINRA

A If the ranking was created and published by a ranking entity Members may not use investment company rankings in any advertisement or sales literature other than rankings created and published by a ranking entity, or rankings created by an investment company or an investment company affiliate but based on the performance measurements of a ranking entity. FINRA defines a ranking entity as any entity that provides general information about investment companies to the public, that is independent of the investment company and its affiliates, and whose services are not procured by the investment company or any of its affiliates to assign the investment company ranking. Rankings in advertisements and sales literature also must also conform to specific FINRA requirements.

Care Obligation

All those making recommendations must use reasonable diligence, care, and skill. Firms must understand the potential risks, rewards, and costs involved with the recommendation. Any recommendations must take into consideration the customer's investment profile and be in the customer's best interest.

A broker-dealer that conducts services on the premises of a financial institution must do all the following, except: A Conduct services in a setting that clearly displays the name of the broker-dealer B After opening a customer account, the BD must disclose in writing that the broker-dealer services are being provided by the member and not the financial institution C Distinguish its broker-dealer services from the services of the financial institution D Maintain its services physically separate from the retail banking activities of the financial institution

B After opening a customer account, the BD must disclose in writing that the broker-dealer services are being provided by the member and not the financial institution A BD that conducts services on the premises of a financial institution must: *Distinguish its broker-dealer services from the services of the financial institution *Conduct services in a setting that clearly displays the name of the broker-dealer *Maintain its services physically separate from the retail banking activities of the financial institution *At or prior to opening a customer account, the BD must disclose in writing that the broker-dealer services are being provided by the member and not the financial institution

All the following statements are true regarding recording of registered persons, except: A If the firm exceeds the allowable percentage of registered representatives formerly employed by a broker-dealer that was expelled from membership, they must record all conversations going forward, or reduce the staff to meet the guidelines within 30 days B Cell phone conversations are strictly prohibited if the firm is required to record conversations C If the firm is subject to the rule, they have 60 days to establish the procedure D The firm must keep the recording program for at least 3 years

B Cell phone conversations are strictly prohibited if the firm is required to record conversations If cell phone conversations cannot be recorded, then only occasional use of cell phones by the sales force is permitted. If the firm is subject to the recording rule, the have 60 days to establish the procedure from time of discovery or date of notification by FINRA that the firm is subject to the rule. As an alternative, the firm may choose to reduce their staff within those 60 days to levels that are acceptable. Once the firm triggers the recording rule, they must begin recording within 60 days and file quarterly reports with FINRA. The firm must continue the program for at least 3 years.

Regulation Best Interest has 4 components that must be met for firms to meet the general obligations of the regulation. Those 4 components are: A Compensation, care, conflict of interest, and compliance obligations B Disclosure, care, conflict of interest, and compliance obligations C Care, compensation, compliance, and conflict of interest obligations D Disclosure, compassion, compliance, discretion obligations

B Disclosure, care, conflict of interest, and compliance obligations The 4 components needed to meet the general obligations of Regulation BI are disclosure, care, conflict of interest, and compliance obligations.

All the following are true regarding FINRA's Code of Mediation, except: A It is a means of settling disputes between member firms and their customers B It cannot run concurrently with an arbitration involving the same matter C The mediator facilitates the proceedings but does not have the power to pass judgement on either party D The process is completely voluntary on both parties

B It cannot run concurrently with an arbitration involving the same matter FINRA's Code of Mediation is designed to settle disputes between member firms, and between members and their customers. This process is a lot more flexible than the traditional arbitration process, which often leads to a resolution which may be fraught with resentment by the losing party. Through mediation, which may run concurrently with an arbitration proceeding, the parties can compromise and find a middle ground unavailable through arbitration. In addition, no one can be forced in mediation. Both parties must agree to it.

Sales literature that includes investment company performance data is limited to quotations of all the following except: A Current yield B Nominal yield and yield to maturity C The average annual total return for 1, 5, and 10 years or since the inception of the fund if less than 5 or 10 years D Tax-equivalent yield

B Nominal yield and yield to maturity Sales literature that includes investment company performance data is limited to quotations of: the average annual total return for 1, 5, and 10 years or since the inception of the fund if less than 5 or 10 years; current yield; and tax-equivalent yield.

A registered representative wants to open an account at another broker-dealer. Under these circumstances, which statement is not correct? A Written approval must be obtained from the employing broker-dealer before the account is opened B Notification must be sent to the employing broker-dealer of already existing accounts within 45 days of becoming employed C The broker-dealer holding the account will advise the registered representative that notification regarding the opening of the account will be made to their employing broker-dealer D Duplicate confirmations and statements will be forwarded to the employing broker-dealer upon request

B Notification must be sent to the employing broker-dealer of already existing accounts within 45 days of becoming employed The employing broker-dealer is legally responsible for all securities activities of its representatives including trade activity in the representative's personal account. The only statement that is incorrect regards notification of already existing accounts. Notification of existing accounts must be made within 30 calendar days of becoming employed.

Regulation Best Interest (BI) was established to protect: A Earnings on investments B Retail customers C Institutional investors D Principals that sign customer new account forms

B Retail customers To bring more transparency to investors regarding their relationships with broker-dealers and investment advisers, the SEC created Regulation Best Interest (BI) and mandated the use of a new customer relationship summary form (Form CRS). Regulation BI established new standards for investment firms when dealing with retail customers. The goal was to increase transparency when recommending an investment or investment strategy.

When working with senior clients, the firm and representative must do all the following, except: A Be alert for intimidation, retitling accounts and theft B Shield the senior clients from speculative, high risk investments C Make reasonable efforts to obtain contact information of a trusted contact person D Place a hold for up to 15 days on the account if fraud is suspected Excellent!

B Shield the senior clients from speculative, high risk investments Firms are now required to make reasonable efforts to obtain the contact information of a trusted contact person for a customer's account. Financial abuse can take many forms, and senior citizens are often seen as easy prey. Firms need to be alert for investment scams, forgery, intimidation, retitling accounts, and theft. FINRA allows firms to place a temporary hold of up to 15 days on an account if fraud is suspected. The hold may be extended an additional 10 days if the firm believes the customer is being financially exploited. The firm and representative are not responsible for shielding customers from high risk investments. They should provide a balanced presentation and give full disclosure of risks.

All the following are true when a person associated with a broker-dealer opens an account at another broker-dealer, except: A Transactions in UITs and mutual funds are exempt from this regulation B The firm opening the account has 30 days in which to notify the employing broker-dealer C The broker-dealer employee must have written consent from their employing firm before opening an account at another broker-dealer D The firm opening the account must supply the employing broker-dealer with duplicate account information upon request

B The firm opening the account has 30 days in which to notify the employing broker-dealer When a broker-dealer employee wants to open an account at another firm, the associated person (employee) must obtain written consent from their employer before opening an account at another firm. Duplicate account information must be sent to the employing broker-dealer if the firm requests it. Certain transactions are exempt from this FINRA regulation including transactions in UITs and mutual funds.

If an investment adviser enters a soft dollar arrangement, which of the following statements is true? A Soft dollars are considered assets of the firm B The soft dollar arrangement must benefit the customer C The soft dollars may be used as compensation to broker-dealers for referring business to the adviser D Soft dollars can be used to pay for overhead expenses of the adviser

B The soft dollar arrangement must benefit the customer Soft dollars are an alternative way for investment advisers to pay for products and services received from a broker-dealer using client commission revenue. The SEC has determined that "soft dollars" are the assets of the client and must be treated as such by both brokerage firms and investment advisers. It is considered a breach of fiduciary duty for an investment adviser to use client assets to benefit themselves. The soft dollar arrangement must benefit the clients. Soft dollars cannot be used for the advisers' benefit including overhead expenses, compensation to broker-dealers for referring business to the adviser, and training of new broker-dealer personnel.

Your client decides to gift securities valued at $25,000 to their daughter. Who would be subject to gift taxes? A Your client as the donor would be subject to gift taxes on the $25,000 gift to his daughter B Your client as the donor would be subject to gift taxes on the value of the securities above the annual exclusion C The daughter would be subject to gift taxes on the entire gift D There is no gift tax between family members

B Your client as the donor would be subject to gift taxes on the value of the securities above the annual exclusion Federal gift tax regulations may apply to the donor of the gifted securities. If the value of the securities is above the annual exclusion the donor could be subject to gift taxes on the value of the gifted securities. The donor does have other options to consider when determining the amounts subject to gift tax. If the donor is married and files a joint return and the spouse consents, they can double the amount of the exclusion. If the amount is still above the annual exclusion amount, they could use their lifetime unified credit.

Which of the following is not considered retail communication? A Form letter to 35 prospective customers B Radio or television ad C A letter from the issuer to the underwriter giving points to be emphasized in promotions D Newspaper ad

C A letter from the issuer to the underwriter giving points to be emphasized in promotions Retail communication includes written and electronic communication sent to more than 25 customers or prospective customers per 30 days (if sent to 25 or less, it is classified as correspondence). Communications directed to a larger retail audience are also considered retail communication. A letter from an issuer to an underwriter is considered an institutional communication.

Written or electronic communication that is targeted to 25 or fewer prospective retail customers in a 30-day period is considered: A Sales literature B Advertising C Correspondence D Retail communication

C Correspondence Correspondence consists of written or electronic communication that is targeted to existing customers and/or 25 or fewer prospective retail customers in a 30-day period. Letters, emails, or text messages sent to more than 25 prospects are considered retail communication.

All the following are considered retail communications under the FINRA communication rules, except: A Reprints of an article in a magazine published by the broker-dealer and sent to 30 customers B A solicitation via radio broadcast C E-mail to 1 person D Form letters to 50 prospects

C E-mail to 1 person A letter or e-mail sent to one individual is considered correspondence by FINRA rules and is subject to spot checks according to house rules. Form letters or group e-mails to 25 or fewer prospects are correspondence, but otherwise they are considered retail communications. Reprints sent to more than 25 people are considered retail communication. Retail communications pertaining to investment companies are subject to FINRA filing requirements, while correspondence is not. The radio broadcast would be considered an advertisement. According to FINRA rules, sales literature and advertising are considered retail communications.

All the following securities are exempt from the 5% Markup Policy, except: A IPOs B Mutual funds C NYSE listed stocks D Municipal bonds

C NYSE listed stocks There are several specific occasions that FINRA recognizes as ones that the 5% Policy may not apply. Those include securities that are difficult to locate, very low-priced securities, small dollar transactions, and the offer of additional services in connection with doing business. In these cases, higher charges may be justified. Securities that require the delivery of a prospectus or offering document are exempt from this policy. Those would include IPOs, municipal bonds, and mutual funds.

Which of the following is advertising under FINRA rules? A Form letters B Group e-mail C Newspaper ads D Text messages

C Newspaper ads Advertising is any retail communication that is distributed via mass media; the broker-dealer has no control over who receives this material. Examples include newspaper ads and commercials on TV or radio. All the other choices will fall under correspondence (distributed to 25 or fewer persons over a 30-day period) or sales literature (distributed to more than 25 persons over a 30-day period).

Under the wash sale rule, a security that is substantially the same as the security sold at a loss can include all the following, except: A Convertible securities of the same company B Same mutual fund ownership C Preferred stock of the same company D Same underlying common stock

C Preferred stock of the same company For purposes of determining substantially the same security under the wash sale rule, call options and warrants on a security are substantially the same as the stock or bond. Convertible bonds or convertible preferred stock are substantially the same as the common stock into which they are convertible.

Broker-dealers can compensate publishers for communications designed to influence the price of a security in all the following situations, except: A The communication is a research report B The communication is clearly described as "paid advertising" C The communication is created by a broker-dealer insider but submitted to a publisher through a ghost-writer for general public distribution D The communication describes the amount and nature of the compensation

C The communication is created by a broker-dealer insider but submitted to a publisher through a ghost-writer for general public distribution Broker-dealers generally cannot compensate publishers for communications designed to influence the price of a security. This includes communications in websites, magazines, newspapers, and any other method. This prohibition does not apply when compensation is paid to a publisher and one of the following criteria is met: The communication is clearly described as "paid advertising", the communication describes the amount and nature of the compensation, and the communication is a research report.

Under what circumstances may a broker-dealer charge both a markup and commission? A If the broker-dealer made the appropriate disclosures of the conflict of interest B If the broker-dealer was registered to act in both capacities C Under no circumstances may a broker-dealer charge both in the same trade D Only if the broker-dealer provided the client with the fee structure in advance, in writing; the broker-dealer must keep a copy of that signed document stating the customer understands the fee structure

C Under no circumstances may a broker-dealer charge both in the same trade It would be a conflict of interest for a broker-dealer to act in both a broker and a dealer capacity in the same trade. In this case, providing disclosure is not enough. A broker-dealer may NOT act as both a broker (earning a commission) and a dealer (earning a markup) in the same transaction.

When investment advisers direct their portfolio trades to broker-dealers that give them products and services that help them manage their investments, this is known as: A A selling agreement B Hard dollar payments C Selling away D A soft dollar arrangement

D A soft dollar arrangement Soft dollars are an alternative way for investment advisers to pay for products and services received from a broker-dealer using client commission revenue. The key in a soft dollar arrangement is that it must benefit the investment advisers' clients.

Which of the following statements concerning FINRA's review of communications policy is correct? A All advertisements pertaining to guaranteed contracts must be submitted to FINRA within 10 days of first use B A log of all individual correspondence related to investment companies must be submitted to FINRA on a quarterly basis C An investment company advertisement must be submitted to FINRA 10 days prior to first use D All retail communications regarding investment company products must be submitted to FINRA within 10 days of first use

D All retail communications regarding investment company products must be submitted to FINRA within 10 days of first use FINRA rules require that all retail communications (sales literature and advertising) be approved by a principal prior to use. Special rules apply to retail communications pertaining to investment companies, UITs, or variable contracts. Copies of these communications must be filed with FINRA within 10 days of first use. FINRA rules require member firms to create a system to supervise both incoming and outgoing correspondence (correspondence may include letters, emails, or text messages). Firms are not required to file a correspondence log with FINRA. Fixed (guaranteed) contract sales are not regulated by FINRA, since these investments are not considered to be securities products.

An investor is unhappy with the amount of money lost in their discretionary account. The investor feels the registered representative has mismanaged the account. As the claimant, the customer must file a complaint with the: A District Business Conduct Committee within 45 days of the alleged violation B Board of Governors within 6 years of the alleged violation C Arbitration Board within 30 days of the alleged violation D Director of Arbitration within six years of the alleged violation

D Director of Arbitration within six years of the alleged violation The claimant (which in this case is the customer) must file the complaint with the Director of Arbitration within six years of the alleged violation. The Code of Arbitration handles monetary disputes between persons in the securities industry, and in some cases, clients and industry personnel.

An investor believes that their registered representative has been churning their account, and in the process has caused them to lose $200,000. To whom would the investor direct a claim to recoup their losses? A SIPC B FINRA's Department of Enforcement C The SEC D FINRA's Code of Arbitration

D FINRA's Code of Arbitration The investor will need to file an arbitration claim to try to recover losses from the RR and/or the broker-dealer. They may also file a complaint with FINRA's Department of Enforcement about the rep's alleged churning, but this complaint will not result in any monetary recovery. SIPC is concerned with losses caused by a broker-dealer's bankruptcy, not the actions of unethical representatives.

Which of the following does FINRA's Code of Arbitration address? A Assessing penalties against registered representatives of member firms B Settling monetary-related disputes C Assessing penalties against member firms D Hearing member firm and registered representative's appeals

D Hearing member firm and registered representative's appeals The Code of Arbitration establishes the rules for settling monetary-related disputes in the securities industry. The Code of Arbitration is not used to take disciplinary action against members or RRs. That is done under the Code of Procedure.

A registered rep is opening a brokerage account with another member firm. The member firm must: A Refuse to open the account B Furnish duplicate confirmations to FINRA C Notify FINRA D Notify the employing firm immediately

D Notify the employing The broker-dealer accepting the new account must notify the employing broker-dealer and provide duplicate information upon request. The accepting firm is NOT required to notify or furnish duplicate information to FINRA. firm immediately

FINRA can assess all the following upon a member firm or one of its associated persons, except: A Censures B Fines C Suspensions D Prison sentences

D Prison sentences While FINRA can assess various penalties, it does not have the authority to send violators to prison. FINRA is an SRO, not a governmental entity with prosecutorial authority.

When must an associated person disclose required information on Form U4 with respect to any customer complaint, examination, or inquiry? A At the end of the year B At the end of the month C At the end of the quarter D Promptly

D Promptly An associated person must promptly disclose required information on Form U4 with respect to any customer complaint, examination, or inquiry.

Conflict of Interest Obligation

Firms must establish, maintain, and enforce written policies designed to address conflicts of interest associated with any recommendations

Compliance Obligation

Firms must establish, maintain, and enforce written policies to achieve compliance with Regulation BI

simplified arbitration

If the dollar amount of the claim does not exceed $50,000

Articles of incorporation/partnership agreement, board meeting minutes, stock certificate books, amendments

Life+3

The decision becomes final after 45 calendar days and can be appealed to FINRA's

National Adjudicatory Council (NAC).

30 business days

Once all evidence is heard and reviewed, arbitrators must render a binding decision within ______________.

stepped-up cost basis

The holding period for inherited securities is always considered long term for the beneficiary regardless of the original investor's holding period or the beneficiary's holding period. Any capital gains realized upon the sale of inherited securities are considered long term and taxable at 15% for most investors.

6 years

The statute of limitations to initiate arbitration is ______________, meaning that arbitration cannot be used for disputes over events that occurred more than 6 years prior to filing a complaint

Blind advertisements

They are often called recruitment ads.

unlimited marital deduction

This means that spouses can pass an unlimited value of assets to each other upon death and not be subject to estate taxes.

Non-discretionary fee-based (NFB)

advisory accounts traditionally charge customers based on assets under management. This fee is generally stated as an annual percentage regardless of how many transactions occur in the account.

Soft dollars

are an alternative way for investment advisers to pay for products and services received from a broker-dealer using client commission revenue

Interactive communications

are communications that have real-time dialogues with third parties

Static communications

are those with no real-time dialogues

ranking entity

as any entity that is independent of the investment company and its affiliates and that provides general information about investment companies to the public. BDs may not use investment company rankings in any retail communication unless the rankings were created and published by a ranking entity, or created by an investment company or affiliate, but based on the performance measurements of a ranking entity.

The SEC has determined that soft dollars are the assets of the client and must be treated as such by

both brokerage firms and investment advisers.

Correspondence

consists of written or electronic communication that is targeted to one individual. can be sent to 25 or fewer retail customers within 30 days.

Code of arbitration

establishes rules for settling monetary-related disputes in the securities industry.

Generic advertising

includes a notice, circular, advertisement, letter, sign, or other communication that does not specifically refer to the name of securities sold by a specific investment company. It can explain in general terms the information rega

mediator

is a neutral impartial person, trained in facilitation and negotiation techniques, who assists in finding a resolution to an issue for both parties involved

Sales literature

is a type of retail communication where the broker-dealer controls the distribution of the material.

wash sale

occurs when an investor sells a security for a loss and purchases "substantially the same security" back within 30 days of the sale

They must report _______________statistical and summary information in detail regarding written customer complaints and copies of specified criminal and civil actions.

quarterly

Expungement

requires the broker-dealer or representative to get a court order or an arbitration award permitting the expungement.

minor rule violation (MRV)

respondent accepts, and the National Adjudicatory Council accepts the letter, the maximum penalty is a fine not to exceed $2,500 per violation nd the representative has 10 days to accept or ask for a hearing.

Code of Arbitration

sets out the rules for settling monetary-related disputes in the securities industry. In fact, the office that supervises these activities is called the Office of Dispute Resolution

FINRA settles disputes with members and/or RRs using

the code of procedure

When securities are inherited

the recipient has a cost basis valued at fair market value on the descendants date of death. The holding period is always long term.

Unified Credit/Lifetime Exclusion

unified credit is a unification of gift and estate tax credits. The total amount available over a lifetime or upon death is currently over $12 million and is adjusted annually for inflation.

Financial Exploitation of Specified Adults

was created to protect senior citizens from abusive and manipulative actions of investment professionals. Under this rule specified adults are defined as persons aged 65 or older, and those aged 18 or older that are unable to protect their own interests due to a mental or physical impairment.

When securities are received as a gift, the recipient of the gift retains the same cost basis as the donor or market value on the date of gift

whichever is less. The donor may have gift tax liability.

All retail communication is required to be filed with FINRA

within 10 business days after first use.