Chapter 9 Exam

Broker-dealers and RRs are not permitted to give gifts in excess of what dollar amount per person per year to another person if the gift is given in relation to the business of that person's employer?

$100

The SEC rule limits the dollar amount of political contributions to $___ by an associated person that is legally entitled to vote for that constituent.

$250

Stan has four different accounts at TWD Securities. He has a cash account with $200,000 of securities and $40,000 of cash, a joint account with his wife which has $740,000 of securities and $335,000 of cash, a joint account with his brother which has only $175,000 of cash, and a margin account with a market value of $75,000 and a debit balance of $40,000. If TWD files for bankruptcy, what is the combined coverage that accounts owned, or partially owned, by Stan will receive from SIPC assuming he takes cash wherever he can? -$485,000 in securities and $465,000 in cash -$975,000 of securities and $350,000 in cash -$400,000 of securities and $250,000 in cash -$675,000 in securities and $315,000 in cash

$485,000 in securities and $465,000 in cash

Suspicious Activity Reports (SARs) include detailed information about transactions that are or appear to be suspicious and need to be filed with FinCEN if a financial institution suspects such activity involving at least:

$5,000 or more

The maximum protection SIPC provides per separate customer is:

$500,000

Broker-dealers, investment companies, and investment advisers must provide their customers with a notice of their privacy policies and practices at the time the relationship is established, and every:

1 YEAR

How long can FINRA retain jurisdiction over one of its members or registered associated persons after they are no longer in the industry?

2 years

Within what time period can a terminated person reinstate their registration without retesting?

2 years

When must a registered person take and complete the regulatory element of their CE?

2 years from their initial registration and every 3 years thereafter

correspondence, email, instant messages, records of gifts is retained for ____ yrs.

3

A registered representative uses a standard form letter which is available on the firm's intranet, approved by the firm for use. The representative sends 15 of these letters to his friends and family. How long must the letter be maintained on file by the firm?

3 years after last use

A member could be fined when an RR is terminated and the member does not notify FINRA within:

30 days

If a person does not pass their qualification exam the first time, how long must they wait before they can retest?

30 days

customer complaints are retained for ___ yrs?

4

CTRs & SARs reports are retained ___yrs?

5

Customer acc records , blotters, municipal complaints, POAs are retained ____ yrs?

6

All of the following would be considered a formal customer complaint, EXCEPT:

A client calls and berates the RR for the unacceptable performance of his last five mutual fund selections; the angry customer informs the RR that he will bring this matter to the attention of the SEC and the firm's home office

A method used by con artists to gain the trust of people by identifying with a large target group is:

Affinity Fraud

How often must a FINRA member firm conduct a compliance meeting for its registered representatives?

Annually

The Securities Investor Protection Corporation (SIPC) is funded by: -Assessments paid by its member firms -Fees paid by retail investors

Assessments paid by its member firms

All of the following transactions would require that a Currency Transaction Report be filed, EXCEPT a: -Check deposit of $20,000 into the account at the firm -Cash deposit of $10,000.01 from an account at the firm -Foreign cashier's check deposit of $11,000 at the firm -Cash deposit of $13,000 into the account at the firm

Check deposit of $20,000 into the account at the firm

4 Record Keeping Time Rules

Correspondence and communications including: e-mails, instant messages, records of gifts are kept for 3 years. Customer complaints are kept for 4 years. CTR & SAR reports are kept for 5 years. Customer account records, blotters, municipal complaints, POAs are kept for 6 years. Articles of Incorporation/Partnership agreement, Board meeting minutes, Stock certificate books are kept for the Life of the enterprise plus 3 years after the enterprise ceases to exist.

Under SEC rules, member firms that maintains records utilizing electronic storage media must preserve the records in all the following ways, except: -Separate duplicate copy in an alternate location -Erasable and rewritable

Erasable and rewritable

A brokerage firm has been informed by FINRA that it must create and implement an anti-money laundering program that conforms to the PATRIOT Act and industry interpretations. Which of the following is required of the firm?

Establish an independent audit testing for compliance to be conducted by member personnel or a qualified outside party

A brokerage firm has been informed by FINRA that it must create and implement an anti-money laundering program that conforms to the PATRIOT Act and industry interpretations. Which of the following is required of the firm? -Establish an independent audit testing for compliance to be conducted by member personnel or a qualified outside party -Require all associated persons to complete the FINRA sponsored anti-money laundering training program

Establish an independent audit testing for compliance to be conducted by member personnel or a qualified outside party

The FINRA 5% Policy requires that consideration be given to all the following when determining markups, except: -Dollar amount of the transaction -Type of security involved in the transaction -Financial profile of the customer -Services provided in connection with doing business

Financial profile of the customer

What would FINRA consider retail communication? I Television spots II A public seminar III A form letter to 24 people who are not currently customers IV Tombstone advertisements

I and II

When a broker-dealer is underwriting a new issue, which rules would always apply? I An employee of the broker-dealer cannot buy the new issue II A registered representative with another firm cannot buy a new issue III The broker-dealer could not sell to a new customer IV The broker-dealer could not sell an insubstantial amount to an insurance company

I and II

Information about an associated person which is available to the public upon request through the FINRA BrokerCheck program includes all of the following, EXCEPT: -Information about the broker's disciplinary history -Information about qualification exams passed -Information about current and former affiliations with member firms -Information about the broker's education

Information about the broker's education

A registered representative is the oldest of eight children. The representative was asked by the family to structure a limited partnership for the purpose of conveying ownership of the family's 22-unit apartment complex. There will be no commission or other compensation paid to the representative. Each of the eight children will own equal shares of the partnership. Based on this information, the registered representative:

Must notify his/her firm

Anti Money Laundering act order is __>___>___?

PLI, Placement, Layering, Integration

After spending 40 minutes on the phone listening intently to an RR from Omega Investments try to pitch a sale, Judy decided not to do business with this firm and asked to be placed on their "do-not-call" list. Based on this request, Omega Investments must: -Honor the do-not-call request and update the list by the end of that business day -Record the request to be placed on the do-not-call list immediately and honor the request before 30 days elapse from the time of the request

Record the request to be placed on the do-not-call list immediately and honor the request before 30 days elapse from the time of the request

A registered representative meets with a client who wishes to invest in ABC International Funds. The employing broker-dealer does not currently have any ABC Funds on their approved mutual fund list. The registered representative does research and thinks it's a good fit for the client and sells the funds to the client privately without disclosing the transaction to the firm. This practice is known as:

Selling away, may not sell investments the broker-dealer does not offer

The local wholesaler for Xania Funds is hosting a lunch for several of a firm's RRs and is looking to spur sales by offering a gold watch to the first broker who sells $500,000 of Xania mutual funds. What is FINRA's stance on this offer?

This offer is prohibited under FINRA rules

What is the purpose of the Securities Investor Protection Corporation (SIPC)? -To protect customer assets in the case of broker-dealer bankruptcy -To guarantee the principal value of bank products

To protect customer assets in the case of broker-dealer bankruptcy

Laurus is a registered representative with Investar Equities. He is considering taking a break from the securities business and work in the family business. How long can Laurus do this before he would need to requalify by exam to work as an RR?

Two years

How can consumers research current and former BDs and RRs registered with FINRA within the past 10 years? -Contact member firms -Use FINRA BrokerCheck

Use FINRA BrokerCheck

Which of the following is required to be maintained for three years? i.Currency transaction reports ii.Instant messages iii.Customer account records iv.Customer Complaints

ii.

Which of the following statements regarding the Telephone Consumer Protection Act of 1991 is false? i.The TCPA establishes permissible solicitation calling hours ii.It applies to automated calls, texts, and facsimile communication iii.Each soliciting firm must maintain an internal 'do not call' list iv.Each soliciting firm must add its list to the national 'do not call' list at least every 30 days

iv.

articles of incorp./ partnership aggreements, board meeting minutes, stock certs. are retained ____yrs?

life+3

Which of the following statements concerning written communications are correct? I Letters to a specific individual are considered correspondence and must be approved by a principal prior to mailing II Letters to a specific individual are considered correspondence and may be subject to spot checks prior to mailing III Form letters are considered sales literature and must be approved by FINRA prior to mailing IV Form letters may be categorized as retail communications, correspondence, or institutional sales material, depending on the recipients

II and IV

Which of the following communications with the public does NOT need to be approved by a principal? -Prospectus sent to customer who requested information about a mutual fund -Advertisement placed in the newspaper that states "Now is the perfect time to open an IRA account" -Form letter that will be sent to all customers recommending investing in stocks, bonds and money market investments -Research report that recommends the purchase of a specific stock

Prospectus sent to customer who requested information about a mutual fund

What must an RR do if they care to engage in any for compensation outside business activity? -Provide prior written notification to their BD -Send an updated resume to their firm

Provide prior written notification to their BD

Under SEC Rules, broker-dealers must provide customers with their free credit balances with every statement but, at a minimum: -Quarterly -Annually

Quarterly