Kaplin Test 1

ordinary income tax due on the amount of the withdrawal that represents earnings At the death of the beneficiary, the account owner must pay ordinary income taxes on the account earnings if funds are withdrawn. Reference: 3.13.11.3 in the License Exam Manual

After the untimely death of the beneficiary, your customer, who is the account owner of a Section 529 plan, wishes to withdraw the assets. You inform the customer that there will be

a BD may outsource solicitation of potential new customers to nonmember third-party service providers BDs may outsource certain supervisory functions, but not solicitation of new customers, to third party providers. Reference: 4.1 in the License Exam Manual

All of the following are true EXCEPT

The firm is required to retain records of communications related to its business that are made through text messaging apps and chat services. As with social media, member firms that look to communicate, or permit APs to communicate, about any part of its business through a text messaging or chat services must ensure prior to the use of that form of communication that the firm is able to properly retain a record of those communications. This is required by Rules 17a-3 and 17a-4 and FINRA Rule 4511. The content of the communication determines what must be retained. If it is in any way business related, it must be retained. Reference: 4.1 in the License Exam Manual

A few of your firm's investors have sought to interact with their registered representatives through convenient text messaging applications and chat services. Which statement is the MOST correct?

with the customers' written permission

A member firm may commingle the securities of 2 or more customers

approve the account with instructions to carefully scrutinize every transaction At this point, there is no evidence on which to file a SAR. You will likely approve the account with instructions to carefully review each transaction. Reference: 2.1.2 in the License Exam Manual

A representative in your office opens up a new account with a customer who indicates he does a lot of business with other countries. He further advises that he will be sending and receiving approximately 10 money wires per month. As branch manager (BOM), you would most likely

Written complaints on Post-It notes, tweets or text messages count in the definition. Verbal complaints should be addressed promptly but, no formal action is required. NOT TRUE: Written complaints on Post-It notes, tweets or text messages count in the definition. Verbal complaints should be addressed promptly but, no formal action is required. Reference: 2.1.3 in the License Exam Manual Reference: 2.1.3 in the License Exam Manual

Broker-dealers are obligated to file customer complaints received over the most recent quarter with FINRA. With that in mind, each of the following statements regarding customer complaints is true:

90 Days or 3 months! If a person does not reregister with a member firm within 90 days of completion of military service, the 2-year clock will begin to run.

Don Harris has just completed 2 years of military service overseas. He would like to reaffiliate with your firm. The tolling of the 2-year license expiration period will terminate if he doesn't reaffiliate with a broker-dealer within

3 years Copies of confirmations must be kept for 3 years. The vast majority of records are kept for 3 years. Reference: 2.16.3 in the License Exam Manual

For how long must copies of confirmations on all customer purchases and sales be maintained?

If specific authorization is received from the customer Normally, disclosure of the broker-dealer's control relationship with the affiliate would be sufficient. However, a sale to a discretionary account requires specific approval of the customer. Reference: 2.1.3.2 in the License Exam Manual

If a broker-dealer is selling shares of an affiliated company, under which of the following conditions could the broker-dealer sell these shares to an account over which the broker-dealer has discretion?

switching Moving from 1 growth fund to another is a taxable event and will likely result in additional charges to the client. Switching several clients also raises suitability issues. Reference: 3.2.3.1 in the License Exam Manual

In reviewing the daily trade blotter, you note that one of your brokers has solicited several of his clients to sell their shares in the Alpha fund, a growth fund, and use the proceeds to buy shares in the Beta fund, another growth fund in a different family of funds. As branch manager, you would be most concerned with

I and II In a best efforts underwriting, the underwriter serves as an agent with no financial obligation for unsold securities. In an all-or-none (AON) offering, the underwriter agrees to devote its best efforts to sell the issue, but the entire offering is canceled if all shares cannot be sold. In a standby underwriting, the underwriter agrees to purchase any unsold shares remaining after the expiration of a rights offering (firm commitment). Reference: 3.15.2 in the License Exam Manual Stand by= firm commitment

In which of the following types of offerings does a brokerage firm have no financial obligation for unsold securities? I.All or none II.Best efforts III.Standby

30 days Firms must file a SAR within 30 days of becoming aware of the suspicious transaction(s). Copies of each SAR filing and the related documentation must be retained for five years from the date of the filing. The law also requires that the filing of a SAR remain confidential. The person involved in the transaction that is the subject of the report must not be notified. Reference: 2.15.2 in the License Exam Manual

Member firms are obligated to file a SAR within how many days of becoming aware of the suspicious transaction(s)?

obtain from Mr. White a limited power of attorney granting discretionary authority over the account to make quick decisions during volatile market conditions There are several steps that should be considered upon spotting the red flags of diminished capacity. For example, prohibiting the securities professional from making securities recommendations to the investor until the concern no longer exists; communicating with the investor's designated emergency contact such as an adult child or the person provided with power of attorney for the investor; escalating the concern to the branch manager and notifying the legal and compliance departments of further conversations with the investor, and involving them as appropriate. Obtaining a POA from a customer showing the red flags of diminished capacity would be wholly inappropriate without some convincing, sound legal reasoning to support it. Reference: 2.1.3.1 in the License Exam Manual

Ms. Monson is a registered representative who has a 30-year business relationship with Mr. White, an active investor. During a recent call, Ms. Monson noticed that Mr. White seemed somewhat disoriented and didn't recall 2 trades that were made the previous week. Each of the following would likely be part of the firm's "next step" process EXCEPT

must accept the bonds If an in-whole call occurs after the trade date, the seller has no choice but to deliver a called bond. The buyer must accept delivery. Reference: 3.11.2.3 in the License Exam Manual

On Tuesday, March 10, a customer enters an order to buy $50,000 of a particular municipal issue. On Thursday, the issuer of the bond announces an in-whole call, which means that the customer

an SIP The Consolidated Tape System (CTS) reports real-time trade information on listed equity securities. The Tape is called consolidated because trades in all listed equity securities that take place in any market are reported. This reporting service is provided by the Consolidated Tape Association (CTA), a registered Securities Information Processor (SIP). Reference: 3.4.1.1 in the License Exam Manual

The Consolidated Tape System is operated by the CTA and registered as

daily If a member maintains a list of borrowable securities for short sale purposes, the list can be no more than 24 hours old.

Under FINRA rules, a list of borrowable securities maintained by a member must be updated

3 or fewer representatives A small office, which has 3 or fewer representatives, does not require a resident Series 9/10 principal as long as the office is under the direct supervision of an office that does have a 9/10 licensed branch manager. Reference: 1.4.5 in the License Exam Manual

Under FINRA rules, a small office is defined as one having

II and III FINRA Rule 5160 states that selling group agreements must include the public offering price and to whom and under what circumstances concessions may be allowed. Reference: 3.15.4.3 in the License Exam Manual

Under FINRA rules, which of the following must be included in selling group agreements? I.Liability for unsold securities II.Public offering price III.To whom concessions will be allowed IV.Management fee

10% If the beneficial interests of restricted persons do not exceed 10% of an account, the account may purchase a new equity issue. Reference: 3.17.4 in the License Exam Manual

Under the de minimis exemption, an initial public offering of common stock may be sold to an account where restricted persons have a beneficial interest as long as their interest in the account does NOT exceed

II and IV The holding period requirement of Rule 144 applies to unregistered securities, no matter who the owner is. Reference: 3.19.1 in the License Exam Manual

Which of the following are subject to the holding period requirements of Rule 144 of the Securities Exchange Act of 1934? I.Registered securities held by a control person II.Unregistered, nonexempt securities held by a noncontrol person III.Registered securities held by a noncontrol person IV.Unregistered, nonexempt securities held by a control person

on or around the expiration of the lockup period for insider stock A booster shot research report is one issued around the time the lockup period for insider stock expires. The idea is to create a more favorable selling environment for insiders. In turn, the firm issuing the report would look to obtain investment banking business from the issuer because the insiders benefiting from the report would return the favor. Reference: 1.4.17 in the License Exam Manual

A booster shot is a research report issued

B) when there is a discrepancy in the valuation of the account A firm carrying a customer account may not take exception to transfer instructions solely because of a disagreement about the value of the securities in the account. The firm may take exception if it has no record of the account, the transfer instructions are incomplete, or the signature appears to be invalid. Reference: 2.6.2.3 in the License Exam Manual

A broker-dealer may take exception to the transfer of a customer account in all of the following situations EXCEPT A) when the firm does not recognize the account B) when there is a discrepancy in the valuation of the account C) when the firm does not recognize the signature on the transfer form as valid D) when the account transfer instructions are incomplete

When a customer sells short, the customer is borrowing stock. The stock lender will still be owner of record on the record date, which is 2 business days following the ex-date. Therefore, the stock lender will receive the dividend from the issuer. Short sellers never receive dividends as they are never long the stock. The buyer will receive the dividend from the issuer only if the short sale is effected prior to the ex-date. In this case, the buyer would be owner of record on the record date. Reference: 2.10.1.2.2 in the License Exam Manual B) Stock Lender

A customer sells short shares of common stock on the ex-dividend date. Which of the following market participants receives the cash dividend? A) Buyer B) Stock lender C) Short seller D) Borrower

has converted WRJ preferred stock into 200 shares of WRJ common and delivery is not expected for at least 15 business days If the convertible security has been converted (note past tense), then the customer is consider long for purposes of marking the ticket. Reference: 3.2.2.6 in the License Exam Manual

A customer submitted a market order to sell 100 shares of WRJ common stock. The order ticket may be marked "long" if the customer

if there is a family relationship to the buyer Officers and directors of private placement issuers may act as purchaser representatives only if they are family members who are not more distantly related than first cousin. Reference: 3.18.2.2 in the License Exam Manual

A director or officer of a private placement issuer may act as a purchaser representative

if it discloses its relationship to the parent company before the completion of the transaction The member must disclose this control relationship before the trade settles. Reference: 2.1.3.2 in the License Exam Manual

A member that is a subsidiary of a publicly held corporation may sell the securities of its parent company to a customer

may purchase the bonds for the account if specifically approved by the customer MSRB Rule G-22 requires that if a registered representative or dealer wishes to purchase bonds of an issuer with which the representative or dealer has a control relationship for a customer's discretionary account, the representative must have specific authorization by the customer to do so. There is no requirement that this specific approval be in writing, however. That said, no municipal securities broker-dealer is permitted to effect a transaction in a municipal security with or for a customer if the broker-dealer has a control relationship unless the broker-dealer discloses the relationship to the customer. If such disclosure is not made in writing, disclosure must be supplemented by the sending of written disclosure concerning the control relationship at or before the completion of the transaction. Reference: 2.6.2.2 in the License Exam Manual

A municipal dealer has a control relationship with the issuer. A registered representative wishes to purchase bonds of the issuer for a customer's discretionary account. The representative

A) outside business activities B) personal bankruptcy filings C) complaints and arbitrations EXCEPT: D) educational history With the exception of educational history, each of these items as well as examinations passed, CRD numbers, registration history and more are available to the public on BrokerCheck. Willful failure on the part of the registered representative to make these and other disclosures on the Form U-4 could be deemed a statutory disqualification. Reference: 4.3.1.7 and 1.3.23 in the License Exam Manual

A prospective customer of the firm is looking to BrokerCheck to see that the firm's representative is qualified and without a serious problem on his record. The following information could be available on BrokerCheck

D) whether, within the past year, the member was part of a selling group offering the issuer's securities Under FINRA rules, research reports must disclose whether the member is a market maker in the security being recommended, whether a control relationship exists between the member and the issuer of the recommended security, the market price of the recommended security as of the report date, and whether the member was a manager or co-manager of any offering of the issuer within the prior year. Being part of a selling group is not a required disclosure. Reference: 3.16.3.2 in the License Exam Manual

A research report distributed by a member firm on the common stock of a listed company must include all of the following information EXCEPT A) whether the member firm is a third-market maker in the common stock B) whether a control relationship exists between the member and the issuer C) market price as of the report date D) whether, within the past year, the member was part of a selling group offering the issuer's securities

a day order Retail not-held orders are day orders unless the customer gives you instructions in writing to the contrary. Reference: 2.1.5 in the License Exam Manual

A retail not held order, in the absence of instructions to the contrary, is considered

October 18 When the number of shares in a stock dividend or stock split represents an increase of 25% or more, the ex-date is 1 business day after the payable date. Reference: 2.10.1.3 in the License Exam Manual Drpe

ABC Company has announced a 50% stock dividend to be distributed on Friday, October 15 to all shareholders of record on Friday, September 10. On which of the following dates will the stock trade ex-dividend?

earnings per share What is considered? number of shareholders market value of publicly held shares number of publicly held shares While the numerical values are not tested, it is important to know that there is no minimum earnings per share requirement. However, there is a minimum earnings requirement. Reference: 3.1.7 in the License Exam Manual

All of the following are minimum requirements for listing on the NYSE EXCEPT

If the MFP had contributed to the election campaign of the governor, the $250 contribution to the inaugural committee would violate Rule G-37. Unless they are directed to a particular person (issuer official), contributions to a political party, while reportable, will not subject the firm to a 2-year ban. However, contributions to an inaugural committee are viewed as contributions to that person. Therefore, if the MFP had contributed any amount to the election campaign of the governor, a violation, and subsequent 2-year ban, would have occurred. Reference: 1.5.21 in the License Exam Manual

An MFP in your office made a $500 contribution to the state of New York Democratic Party and a $250 contribution to the inaugural committee of the newly elected governor of the state. Which of the following statements is TRUE?

Brokers may place a buy MOC order. After 3:45 pm, only MOC orders on the other side of the imbalance may be submitted. Reference: 3.1.4.2.3 in the License Exam Manual

An order imbalance of 70,000 shares for XYZ Company (NYSE) on the sell side is published at 3:45 pm. Which of the following statements is TRUE?

A) $40,000 The market value at maintenance is calculated by dividing the debit balance in the account by .75 (if minimum maintenance is 25%). The debit balance in this account would be $30,000. $30,000 divided by .75 equals $40,000. This calculation tells the investor that the market could fall to below $40,000 before a maintenance call would be required. Reference: 2.4.3 in the License Exam Manual

As an initial transaction in a margin account, a customer buys 2,000 XYZ at $30 and satisfies the Regulation T requirement. What is the long market value at maintenance? A) $40,000 B) $50,000 C) $35,000 D) $45,000

$11,000 Assuming that the customer paid for the securities in full, he would generate $11,000 in SMA. Because the customer need pay only half of the securities' value ($11,000), the additional cash paid ($11,000) would be considered a nonrequired cash deposit and would be credited to the SMA. Another way to look at it is the customer has fully paid securities with a loan value of 50%, or $11,000. Reference: 2.4.3.3 in the License Exam Manual

By how much would the SMA increase if a customer bought $22,000 of marginable stock in a new existing margin account and paid in full for the transaction?

distribution of proxy statements What does it do? custody and safekeeping a clearance and settlement processing of dividend and interest payments DTCC does not distribute proxy statements on behalf of issuers. Rather, issuers send these directly to shareholders or to broker-dealers holding customer securities in street name. Reference: 2.7.3.1 in the License Exam Manual

Depository Trust & Clearing Corp. provides all of the following services EXCEPT

accurate information on beneficial owners DTC does NOT maintain beneficial owner information. Issuers coordinate through DTC any communication to DTC participating broker-dealers and they (the broker-dealers) in turn are responsible for passing along the issuer related communications to their customers, the beneficial owners. In this vein, DTC's Proxy Services may link broker-dealers and issuers of eligible securities on matters such as shareholder meetings. Broker-dealers in turn are responsible for distribution of the information to their customers, the ultimate beneficial owners of interest. Reference: 2.7.3.1 in the License Exam Manual

Depository Trust Company (DTC) was established to promote or alleviate each of the following for eligible securities EXCEPT

A a copy of Form U-5 must be provided to Member Firm #2 by Member Firm #1 Member Firm #1 must send Form U-5 to FINRA and give a copy of the form to the terminating representative. Member Firm #1 is not required to provide a copy of the form to Member Firm #2. Member Firm #2 secures a copy of the form for its files from either FINRA or its new employee. Reference: 1.3.3 in the License Exam Manual

Form U-5 is filed by Member Firm #1 for a registered representative who is moving to Member Firm #2. Under FINRA rules, all of the following statements are true EXCEPT A) a copy of Form U-5 must be provided to Member Firm #2 by Member Firm #1 B) Member Firm #2 must secure a copy of Form U-5 from either the registered representative or FINRA C) Form U-5 must be filed with FINRA D) a copy of Form U-5 must be provided to the representative by Member Firm #1

I and III If a representative's actions trigger a 2-year prohibition, the balance of the time remaining must be served by the employer member, even if the representative leaves to join another firm. In addition, the new employer is also required to serve out the balance of the time remaining. Reference: 1.5.21 in the License Exam Manual

If a registered representative makes a political contribution that triggers a 2-year prohibition under MSRB Rule G-37 but 12 months later leaves to join another member firm, which of the following statements are TRUE? I.The former employer must serve out the balance of the prohibition time remaining. II.The former employer need not serve out the balance of the prohibition time remaining. III.The new employer must serve out the balance of the prohibition time remaining. IV.The new employer is not required to serve out the balance of the prohibition time remaining.

is in compliance with FINRA rules because the partnership is a passive investment The prohibitions against outside business activities do not apply to a passive investment. Holding a limited partnership interest does not entitle the representative to actively manage the partnership; thus, the representative is not in violation. Reference: 1.5.7 in the License Exam Manual

If a registered representative purchases a limited partnership unit without providing prior written notice to her employing firm, the representative

the name of the lead underwriter All of the information except the membership of the syndicate is considered material to the client's decision. Reference: 3.10.12 in the License Exam Manual

If securities purchased in a negotiated municipal offering are sold, each of the following must be disclosed on customer confirmations EXCEPT

II.Registered representative, if settled for $20,000 IV.Member, if settled for $30,000 Members must file notice with FINRA to report securities- or commodities-related judgments, awards, or settlements of $15,000 or more against individuals or $25,000 or more against member firms.

Members must immediately file notice with FINRA regarding a complaint against which of the following?

not allow Paul to place orders on behalf of clients or himself A volume-weighted average price order to buy is generally entered by institutional investors who want to buy at an average price not to exceed the VWAP. The volume-weighted average price of a security is not known until the end of the trading day. However, the order is executed during the day. If you beat the VWAP, you're a hero. If you don't, you're not. The VWAP is calculated by totaling the dollar value of all trades and dividing that total by the total number of shares traded. In this case, Paul has received material, nonpublic information regarding a substantial order, and trading on this information for his own account as well as the accounts of any clients over which he has discretionary authority would be considered front running. Reference: 3.2.2.2.3 in the License Exam Manual

Paul Smith, a representative in your office is interested in buying XYZ stock for several clients over which he has discretionary authority as well as for his own account. He has spoken to an equity trader at your firm who indicated that they had received a substantial order for XYZ stock during morning trading and was told to ''beat the VWAP'' by the buy-side trader. As BOM, you would

If the fund has carve-out procedures in place FINRA Rule 5130 allows hedge funds in which restricted persons own more than 10% of the fund's shares to buy new equity issues if the fund has carve-out procedures in place. A carve-out procedure enables the fund to segregate the interests of restricted and nonrestricted persons and to direct the profit from a new issue investment so that restricted persons will not receive a benefit in excess of 10%. Reference: 3.17.6 in the License Exam Manual

The managing partners of a hedge fund collectively own 15% of the fund's shares. Under which of the following circumstances may a member firm sell an initial offering of common stock to the fund?

I and III A member can grant discounts and other concessions only to other member firms. A suspended member must be treated like a member of the general public (no discounts or concessions). The only exception is that a member firm can grant concessions to a foreign nonmember firm that is ineligible for FINRA membership. Reference: 1.5.1 in the License Exam Manual

To which of the following firms could a member grant concessions or other allowances? I.Another member firm II.A suspended member firm. III.A foreign nonmember broker-dealer ineligible for FINRA membership IV.A U.S. nonmember broker-dealer

If the sale will not increase the account's percentage equity ownership in XYZ above the level as of 3 months before filing the registration statement Under the anti-dilution provisions of FINRA Rule 5130, if a restricted person already has an equity position in the subject company, that person would be permitted to buy shares at the public offering price provided the sale does not increase his percentage equity ownership in the issuer above the level as of 3 months before the filing of the registration statement. This person must also have held the position in the issuer for at least 1 year before the effective date of the offering, and any shares acquired are subject to a 3-month lockup period. Reference: 3.17.9 in the License Exam Manual

Under FINRA Rule 5130 a restricted person has a small equity interest in XYZ Corp., a privately held company. XYZ now wishes to go public with an offering of its common stock. Under which of the following circumstances could your firm, acting as syndicate manager, sell shares at the offering price to the account of this restricted person?

Marking the close A market maker ups the inside bid at or near the close of the market. This is done to send a positive message to the market that the stock is going to be increasing in value, and it is considered manipulative. Front running and interpositioning are prohibited practices but are not manipulative. Trading along is acceptable but only on an order- by-order basis. Reference: 3.2.3.1 in the License Exam Manual

Under FINRA rules, which of the following is a manipulative practice?

B) the relative change in the bond's value over the preceding week. Factors to be considered in determining a fair price in principal transactions are the dealer's best judgment as to value, the expense involved in effecting the trade, the fact that the dealer is entitled to a profit, and the total dollar amount of the trade. Reference: 2.6.2.5 in the License Exam Manual

Under MSRB rules, all of the following would be relevant in determining a fair and reasonable markup EXCEPT A) the expense involved in effecting the transaction B) the relative change in the bond's value over the preceding week C) the judgment of the dealer as to fair market value D) the total dollar amount of the transaction

No holding period required Rule 144 governs sales by 2 different categories of people—affiliates (control persons) and nonaffiliates. The rule also applies to 2 categories of stock—registered and unregistered. Therefore, to answer questions concerning restrictions on stock sales under Rule 144, 2 issues are involved. In this question, the seller is an affiliate and the stock is registered. Therefore, the sale is subject to the volume restrictions imposed by Rule 144, but no holding period is required. Reference: 3.19.1 in the License Exam Manual

Under the provisions of Rule 144, what is the minimum holding period for the sale of control stock acquired through an open-market purchase?

II and IV An Eastern account has both undivided liability when purchasing the bonds from the issuer and undivided responsibility for bonds that remain unsold. Reference: 3.13.3.2 in the License Exam Manual

Which of the following describe an underwriter's financial liability if a syndicate is established as an Eastern account? I.Divided liability to purchase securities from the issuer II.Undivided liability to purchase securities from the issuer III.Divided responsibility for securities that remain unsold IV.Undivided responsibility for securities that remain unsold

II and IV Rule G-27 requires regular and frequent examination of a discretionary account by a designated municipal securities principal or municipal securities sales principal in order to detect and prevent irregularities and abuses. Financial and operations principals do not supervise account activity.

Which of the following individuals may review transactions in discretionary municipal trading accounts in order to detect and prevent irregularities and abuses? I.Chief compliance officer II.Municipal securities principal III.Financial and operations principal IV.Municipal securities sales principal

All of them FINRA may impose a statutory disqualification on an associated person for a number of offenses. If a securities self-regulatory organization has expelled or suspended a person for violating its rules, FINRA may prohibit the person from associating with a municipal securities firm. The prohibition also applies if the SEC has denied or revoked the person's registration or has found the person to be the cause of another person's disqualification. Reference: 1.1.2.1 in the License Exam Manual

Which of the following may serve as grounds for the statutory disqualification of a person from association with a municipal securities dealer? I.Previous suspension of his registration as a municipal securities representative II.Previous denial of his application for registration as a municipal securities principal III.Previous revocation of his registration as a municipal securities sales principal IV.Previous offense causing the suspension of someone else's registration

I and IV Outside employment must be disclosed in writing. Permission is not required; however, do keep in mind that the firm may establish policies that preclude outside activities. Reference: 1.5.7 in the License Exam Manual

Which of the following statements regarding a registered person seeking weekend employment by an entity other than the employing member are TRUE? I.FINRA rules require written notification to the employing member. II.FINRA rules require prior written consent from the employing member. III.NYSE rules do not permit outside employment. IV.Member firms may impose specific conditions or limitations on a registered person's outside business activity, including prohibiting the activity.

An increase in the quality and marketability of the bonds Prerefunding involves the issue of bonds with a lower coupon than an outstanding issue. The proceeds of the new issue are invested in Treasury securities (SLGS), which are held in escrow. While interest income from the SLGS is used to pay the interest expense on the older issue, the proceeds at redemption are used to meet the earliest call on the old issue. Prerefunding is used principally for those bond issues that have call protection. Prerefunding becomes desirable if interest rates decline. The usual result of refunding is to increase the quality and therefore marketability of the refunded issue. Reference: 3.13.10 in the License Exam Manual

Which of the following usually results from the prerefunding of an issue of municipal securities that has call protection?

A nonregistered sales assistant who was arrested for shoplifting An associated person is any person engaged in the investment banking or securities business controlled directly or indirectly a member firm, whether or not they are registered. A sales assistant is an associated person. An arrest for stealing is a reportable event, whereas a misdemeanor charge or conviction or failure to file income tax is not reportable. Likewise, misdemeanor gambling charges or convictions are not reportable. Reference: 1.1.2.1 in the License Exam Manual

Which of the following would require disclosure to FINRA? A) A nonregistered sales assistant who was arrested for shoplifting B) A registered representative who was found guilty of driving recklessly, a misdemeanor C) A branch office manager who is charged with misdemeanor gambling D) A registered options principal is charged with failure to file a timely tax return, a misdemeanor

I and III When a significant order imbalance occurs, trading on the floor is halted to alert market participants to the situation and to allow the DMM to disseminate information concerning a price range at which trading will begin. A nonregulatory halt on an exchange floor does not preclude other markets from trading the stock. When a regulatory halt is imposed by a security's primary market (e.g., pending news), other U.S. markets that trade the security must honor the halt. Reference: 3.1.1 in the License Exam Manual

XYZ Corp, an NYSE-listed company, is subject to a nonregulatory trading halt due to an order imbalance. Under SEC rules, which of the following are TRUE regarding orders for XYZ during the halt? I.They may be directed to the third market for execution. II.They may not be directed to the third market for execution. III.They may be directed to an ECN for execution. IV.They may not be directed to an ECN for execution