Unit 17 Test
A customer can make a toll-free inquiry to determine the disciplinary history of a registered representative by contacting the A) SIPC B) SEC C) CRD D) Nasdaq
C) CRD
Your broker/dealer has received a written complaint from a customer. FINRA rules require that a record of the written complaint be kept on file by the BD for how long? A) 4 years B) 3 years C) As long as the broker/dealer is in existence or a continues to be a FINRA member firm D) Until the complaint is resolved
A) 4 years
Your firm prepares a communications piece to be made available to several of your institutional customers only. Your broker/dealer is aware that some of these institutional customers will use the pieces your broker/dealer has prepared for them from time to time and distribute the pieces to their retail customers unaltered. How must the piece be handled by your broker/dealer regarding FINRA approval and filing requirements? A) As a retail communications piece B) As correspondence C) As an institutional communications piece D) As an internal piece intended for its own personnel
A) As a retail communications piece
Market letters may be supervised as correspondence instead of retail communications A) as long as they are distributed to 25 or fewer existing retail customers within any 30 calendar-day period B) only when they are distributed to more than 25 existing retail customers within any 30 calendar-day period C) at all times D) never
A) as long as they are distributed to 25 or fewer existing retail customers within any 30 calendar-day period
Content having to do with the business of a broker/dealer or registered representative delivered electronically to the public on social networking Websites and blogs A) is subject to all rules and regulations governing communications with the public B) is never subject to supervisory rules if it is static content such as a RR's profile or background C) can only be subject to supervisory rules but not filing rules D) is not subject to the rules and regulations addressing communications with the public because it is delivered electronically
A) is subject to all rules and regulations governing communications with the public
A registered representative gives a free financial seminar at a resort to an audience composed entirely of retail investors. Which of the following statements is TRUE? A) No principal approval is necessary. B) Approval by a principal of the firm is necessary. C) A copy of the script or materials distributed must be provided to the SEC. D) The registered representative also must be licensed as an investment adviser.
B) Approval by a principal of the firm is necessary.
Which of the following violations could bar an agent from employment in the securities industry? A) Associating with a known felon B) Conviction for the misdemeanor of petty theft of money from a client C) Being convicted of a traffic violation D) Failing to qualify by examination as an agent
B) Conviction for the misdemeanor of petty theft of money from a client
A registered representative wants to advertise the address and telephone number of his home residence, from which he works one or two days per week, on a social website. This is A) not allowed because this type of advertisement would be prohibited on any form of website or social media B) allowed only if the location was approved by his firm's self regulatory organization C) allowed only if the registered representative does not accept customer orders there D) not allowed because a residence can not be considered an office from which to conduct business for a broker dealer
B) allowed only if the location was approved by his firm's self regulatory organization
The firm element of the continuing education requirement must be completed A) on the 3rd registration anniversary and every 2 years thereafter B) annually C) on the 2nd registration anniversary and every 3 years thereafter D) every 3rd year
B) annually
A broker/dealer allows registered representatives to utilize social networking sites such as Facebook and LinkedIn but prohibits the use of delivery platforms such as blogs where comments can be posted, starting discussions on blog sites, or starting discussions in Internet chat rooms and posting tweets on Twitter. One of the BD's registered representatives tweets that he is going to learn the details about a new investment product today. The Twitter posting A) is not allowed because FINRA prohibits modes of communication where content can be posted impulsively such as on blogs, in chat rooms, or tweeting B) is not allowed because the BD has in-house rules prohibiting tweeting in regards to business C) would be allowed as long as the registered representative had adhered to all of FINRA's guidance on utilizing electronic platforms and devices D) is allowed because no investment advice was offered regarding the new product in the tweet
B) is not allowed because the BD has in-house rules prohibiting tweeting in regards to business
Under the Code of Procedure, the maximum fine for a minor rule violation (MRV) is A) 10000 B) 7500 C) 2500 D) 1000
C) 2500
Which of the following materials is subject to FINRA's filing requirements? A) Internal memo describing the benefits of an investment in a certain unit investment trust B) Prospectus for a closed-end management investment company C) Retail communications for an open-end management investment company D) Prospectus for a face amount certificate company
C) Retail communications for an open-end management investment company
Before becoming registered as a representative, an individual may A) send research reports to prospective clients B) solicit indications of interest from prospective purchasers C) compile a prospect list D) effect trades for customers with commissions deferred until registered
C) compile a prospect list
In compliance with FINRA's requirement to maintain a plan to continue conducting business in the event of a significant occurrence, all of the following statements regarding a business continuity and disaster recovery plan are accurate EXCEPT A) the member firm must designate a senior member of management who is also a principal of the firm to initially approve the plan and to conduct a review of the plan annually B) the plan must document how the firm will continue to communicate with clients in the event of a significant disruption C) the member firm must designate as contact persons any 2 employees of the firm D) the plan must document how the firm will continue to communicate with employees in the event of a significant disruption of business
C) the member firm must designate as contact persons any 2 employees of the firm
An individual who has worked as a registered representative must requalify for registration if he subsequently takes a job outside the securities industry for more than A) 18 months B) 12 months C) 6 months D) 24 months
D) 24 months
Which of the following statements regarding investment companies is TRUE? A) Retail communications for investment companies must be pre-filed 10 business days before first use when the communication does not include a performance ranking. B) Pre-filing for investment company retail communications is always required. C) Pre-filing for investment company retail communications is never required. D) Retail communications for investment companies must be filed within 10 business days of first use if the communication does not include a performance ranking.
D) Retail communications for investment companies must be filed within 10 business days of first use if the communication does not include a performance ranking.
A broker/dealer informs registered personnel that, to satisfy the annual compliance meeting requirements, they have recorded a Webcast that individuals can view at their own convenience. A Webcast of this type would be A) prohibited because this is recorded and not a live Webcast B) allowed for registered representatives but not for principals C) allowed for principals only D) allowed for all registered personnel if informed of the opportunity to submit questions and receive answers in a timely fashion
D) allowed for all registered personnel if informed of the opportunity to submit questions and receive answers in a timely fashion
An employee involved in the management of a FINRA member's business, particularly in the supervision of business solicitation or in training, must be registered as a A) compliance officer B) partner C) broker D) principal
D) principal
An individual is employed as a research analyst for a member firm that specializes in investment banking and has just completed a research report comparing two companies in the semiconductor business. Which of the following would be considered prohibited activities by this analyst, under FINRA rules? I. Purchasing shares of a semiconductor company before that issuer's IPO II. Trading in these two stocks or their derivatives in a manner inconsistent with that analyst's recommendation III. Purchasing shares of either of these two stocks for a personal account after the research report has been issued IV. Purchasing shares of the XYZ Semiconductor Fund, a fund qualifying as a diversified management investment company under the Investment Company Act of 1940 but not covered or analyzed in the research report
I and II
To which of the following persons may a broker/dealer pay commissions under a continuing commission contract? I. To a retired employee, for past business II. To the widow of a former employee, for past business III. To a retired employee who refers a neighbor to the broker/dealer IV. To a retired employee who, in the course of his travels, acquires new business for the broker/dealer
I and II
Which of the following are differences between the Code of Procedure and the Code of Arbitration Procedure? I. The Code of Procedure deals with violations of the Conduct Rules, whereas arbitration is used to settle disputes. II. Mediation is not required with the Code of Procedure but is mandatory with Arbitration. III. Code of Procedure decisions may be appealed, whereas decisions reached under Arbitration may not. IV. Arbitration is used for violations that are more serious than those for which the Code of Procedure is used.
I and III
Which of the following disputes must be resolved using the Code of Arbitration? I. Dispute between two FINRA members II. Dispute between two banks III. Dispute between a member and an associated person IV. Dispute between two customers
I and III
FINRA requires that each registered representative and principal receive compliance training on an annual basis. Regarding the FINRA requirement, which of the following statements are TRUE? I. The meeting delivery method can be individually or in groups. II. Webcast must be live and may not be recorded. III. Participants must be able to ask questions in a live format. IV. The meeting can be in person or by Webcast.
I and IV
Regarding a FINRA member broker/dealer website which of the following is true? I. When FINRA is referenced on a member broker/dealer website it is meant to imply that the broker/dealer has the approval of FINRA. II. If FINRA is referenced on a member broker/dealer website a hyperlink to the FINRA website is mandated. III. When FINRA or its logo is referenced it must not appear in a typeface larger or more prominent than the broker/dealer's own name and logo. IV. A reference to FINRA membership is mandated by FINRA on member broker/dealer websites.
II and III
FINRA may take which of the following actions against members or associated persons who violate the Conduct Rules? I. Imprisonment II. Censure III. Indictment if the charge involves a violation of criminal law IV. Suspension
II and IV
