SIE 9

An individual who has an ongoing relationship with a firm is called a: A Customer B Vendor C Contact D Consumer

A A consumer is essentially just a prospect, one who has provided personal information in the pursuit of a transaction or potential transaction. A customer has an ongoing business relationship with the representative and/or firm.

Which of the following individuals would be exempt from registration? A An individual who reports completed trades to customers B A sales trainee that submits an occasional securities transaction C A principal that oversees branch activity but does not meet with clients D A sales assistant taking an order to buy securities

A A member firm must register its representatives and principals. Employees exempt from registration include any person whose functions are solely clerical or ministerial, or employees not actively engaged in the securities business. Taking an order to buy or sell a security requires that individual to be registered. The principal who does not meet with clients is supervising representatives, so registration is required.

What must an RR do if they care to engage in any for compensation outside business activity? A Provide prior written notification to their BD B Disclose how much they have made in the past and how much they anticipate making in the future C Send an updated resume to their firm D Submit new fingerprints to their supervising principal

A FINRA requires RRs who engage in any outside business activities to provide prior written notification to their firms. Broker-dealers may restrict or prohibit activities which they believe may represent a conflict of interest of those activities. However, this does not include work for which the RRs is not compensated, such as volunteer work for charities.

A registered representative is considering taking a break from the securities business and work in the family business. How long can the RR do this before needing to requalify by exam to work as an RR? A 2 years B 6 months C 1 year D 5 years

A From the day the U5 is filed with FINRA by the RR's employer, they can be unaffiliated for 2 years. After 2 years, they will need to requalify by passing the appropriate exam to work as an RR.

A large producer with SDM Investments sold over $9 million of the ABC family of funds in the first 10 months of the year. ABC's regional distributor tells this producer that if they hit the $10 million mark, they will personally send them on an all-expenses paid trip to Rome. According to FINRA rules, which of the following is correct? A The RR may not accept this offer because it is in violation of FINRA rules B The RR may accept the trip provided they inform their branch manager and receives clearance from SDM's Chief Compliance Officer C The RR may accept the trip if they declare the value of the trip as income D The RR may accept the trip if they inform their branch manager

A RRs are prohibited from accepting special deals from a distributor. Any payments made to a RR must be disclosed in the prospectus.

An RR has failed to complete the regulatory element of the securities industry continuing education program within the required time frame. Which of the following is true regarding this situation? A The RR's registration will be inactive B The employer must terminate the RR's employment C A 120-day extension will automatically be granted D Employment status will not be affected unless the RR also fails to complete the firm element

A RRs are required to take regulatory element training on the second anniversary of their initial securities registration and every three years thereafter (2nd anniversary, then 5th anniversary, then 8th anniversary, then 11th anniversary, etc.). Brokers failing to complete the training within a 120-day grace period from their anniversary date will have their registrations deemed inactive. RRs with an inactive status may not perform in any capacity that requires a securities registration. They are also prohibited from collecting compensation tied to their registration (i.e., commissions, etc.).

All the following records must be retained for a period of 6 years, except: A Emails B Blotters C Customer account records D Municipal complaints

A SEC rules set which records must be kept by member firms, how long those records must be retained, and the manner in which they must be kept. If a time period is not specifically stated for a record, the default time period of retention is 6 years. Correspondence and communications including emails, instant messages must be kept for a period of 3 years. All other choices in this question must be retained for a period of 6 years.

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

A 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.

For securities not covered by SIPC in a broker-dealer bankruptcy proceeding, the customer becomes a(n): A General creditor B Secured creditor C Owner of the bankrupt firm D Secured factor

A P204 When a broker-dealer goes bankrupt, SIPC will cover up to $500,000, of which no more than $250,000 can be in cash. For securities and cash above SIPC's coverage, the customer becomes a general creditor of the defunct broker-dealer.

Bank Secrecy Act

Authorizes the Treasury to require financial institutions, including broker-dealers, to keep records and file reports about the source, volume, and movement of funds into and out of the country and through domestic financial institutions

Which of the following would not be required to satisfy the fingerprinting requirement? A A supervising principal that oversees the activities at a branch B An individual that works in the broker-dealer marketing department C An individual that is client facing, soliciting securities business D An individual that works in the back-office handling accounting records

B Every employee of a national securities exchange, broker-dealer, registered transfer agent, and registered clearing agency who handle the firm's securities, monies, or accounting books and records must satisfy the fingerprinting requirement. Exception to fingerprinting applies to people not engaged in the sale of securities, who do not handle securities, monies, or accounting records, and who do not supervise persons engaged in such activities.

Broker-dealers and RRs are not permitted to give gifts more than 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? A $175 B $100 C $125 D $150

B Broker-dealers and RRs are not permitted to give gifts in excess of $100 per person per year to another person if the gift is given in relation to the business of that person's employer.

Broker-dealers, investment companies, and investment advisers must provide its customers with a notice of its privacy policies and practices at the time the relationship is established, and every:​ A 2 years after B Year after C Quarter after D 6 months after

B Broker-dealers, investment companies, and investment advisers must provide customers with a notice of their privacy policies and practices at the time the relationship is established (initial notice) and every year after (annual notice).

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

B Communications with the public can be defined as either correspondence or retail communications. Correspondence is defined as a communication made available to 25 or fewer existing or prospective clients and is subject to post use review and approval (provided the firm has appropriate supervisory procedures in place). Retail communications are defined as a communication made available to more than 25 existing or prospective retail clients which includes advertising and sales literature. Retail communication must be approved by a principal before the earlier of its filing with FINRA or first use. Sales literature is a type of retail communication where the broker-dealer controls the distribution of this material. It is provided to a targeted audience, such as group emails, text messages, and form letters to more than 25 prospects. Research reports and brochures are other examples of sales literature. Advertising is retail communication that is distributed via mass media.

Which of the following situations best describes an example of continuing commissions? A An RR continues to earn commissions on equity trades of clients after retirement B A retired RR receiving trailer commissions on funds that clients purchased prior to retirement C An RR continues to receive sales loads on new fund purchases of clients after retirement D A retired RR shares commissions with a former colleague on accounts referred

B Continuing commissions were established so that an RR can continue to be compensated after retirement and license expiration, if the proper paperwork was completed while registered. These commissions can only be paid on business the rep produced while registered. The rep cannot be compensated for referring business to their former firm once their registration has been terminated.

All the following are events that may lead to statutory disqualification, except: A Felony conviction for DWI that occurred 5 years ago B Misdemeanor conviction for drug possession 2 years ago C Expulsions and current suspensions from membership in an SRO D Bars and current suspensions ordered by the SEC or SRO

B Disqualifying events include securities and theft-related misdemeanor convictions, and all felony convictions for a period of 10 years from the date of conviction. The misdemeanor conviction for drug possession is not securities or theft-related, so it will not lead to statutory disqualification. All the other choices are grounds for statutory disqualification.

All the following are required by FINRA when submitting a request for initial registration for an associated person, except: A Electronic submission of Form U4 through the Central Registration Depository B Proof of successful completion of background and drug screens C Obtaining the applicant's manual signature on Form U4 D Submission of the applicant's fingerprints

B FINRA requires that member firms submit a completed Form U4 for each newly registered associated person. This form is submitted electronically through the Central Registration Depository, sometimes known as CRD or WebCRD. Each applicant must submit their fingerprints and a manually signed copy of Form U4 to their member firm as part of their application process. Although many broker-dealers require background checks and/or drug testing of their employees or potential employees, neither is required by FINRA.

A registered representative wants to send a research report to a client regarding a specific mutual fund. Which statement is true regarding the research report? A It may be sent to mutual fund investors B It is classified as retail communication C Only a registered principal may use any retail communication besides the prospectus D It may not be sent on mutual funds

B Research reports are classified as retail communications and are subject to FINRA filing requirements.

Which statement is not correct regarding requirements for retail communications? A Retail communications include advertisements and sales literature B Retail communications must be filed with FINRA at least 10 days prior to first use C Retail communications must be approved by a principal prior to first use D Firms must maintain a copy of all advertisements along with a record of which principal approved its use

B Retail communications, include advertisements and sales literature. FINRA requires all retail communications be filed with FINRA within 10 business days of first use, not beforehand. All retail communications must be approved by a principal prior to first use or at the time of filing with FINRA, whichever is earlier. Records of retail communications must be maintained for 3 years from the date of last use. These records must indicate who prepared and who approved each piece of sales literature and advertising.

Which of the following is not required under a firm's AML program? A Provide on-going training to the firm's personnel B File quarterly reports with FINRA detailing surveillance activity C Designate an anti-money laundering contact to FINRA D Establish and maintain procedures that will detect money laundering

B The Bank Secrecy Act requires that each member firm must establish and maintain procedures that will detect money laundering, establish and maintain policies to comply with the Bank Secrecy Act, test for compliance with the program, designate an anti-money laundering contact to FINRA, and provide on-going training to the firm's personnel. No quarterly reports are required.

What is the purpose of the Securities Investor Protection Corporation (SIPC)? A To protect broker-dealers against employee fraud or embezzlement B To protect customer assets in the case of broker-dealer bankruptcy C To protect customers against market declines D To guarantee the principal value of bank products

B The Securities Investor Protection Corporation (SIPC) is a non-profit organization that insures customer assets against loss due to the financial failure of a broker-dealer. When a broker-dealer becomes financially insolvent, SIPC will attempt to recover customers' securities positions.

An associated person has failed their Series 6 exam for the third time. How long must he wait before attempting the exam again? A They may not attempt the exam again B 180 days C 30 days D 90 days

B This is a situation you do not want to face. If upon the third attempt to pass a securities exam you fail, you must wait 180 days, i.e., six months, before you'll be allowed to take the exam again.

An MFP is entitled to vote for an elected official's campaign and writes a check from a joint account for $500. The representative provides the employing firm with a copy of the check and a letter stating that half the contribution was on behalf of the spouse, even though only the MFP has signed the check. Is the municipal securities firm banned for 2-years from transacting municipal securities business with the issuer? A No, because the ban is only triggered when an MFP contributes in excess of $500 B Yes, because the MFP is deemed to have made the full $500 contribution C No, because MFP provided evidence that half the contribution was from the spouse D Yes, because the MFP was not permitted to contribute to an elected official's campaign that the MFP is entitled to vote for

B P194*** MSRB Rule G-37 specifically prohibits brokers, dealers, or municipal securities dealers from engaging in municipal securities business with an issuer within two years after any contribution is made to an official of the issuer by either the broker-dealer, municipal securities dealer, or any municipal finance professional (MFP) associated with these firms. There is one exception to this rule, which is considered a de minimis rule. The prohibition would not apply if the only contributions to officials of issuers are made by MFPs entitled to vote for such officials, provided the contributions are not in excess of $250 by each MFP to each official, per election. If the MFP signs a check, even if drawn on a joint account, and submits it as a contribution to an issuer official, the MFP is deemed to have made the full contribution. If the MFP and the joint account holder BOTH sign the check, each person is deemed to have made half the contribution.

Currency Transaction Reports must be filed on all cash transactions over: A $30,000 B $100,000 C $10,000 D $1,000,000

C According to the Bank Secrecy Act, a Currency Transaction Report must be filed for any cash or cash equivalent transaction over $10,000.

A method used by con artists to gain the trust of people by identifying with a large target group is: A DoS B Phishing C Affinity fraud D Identity theft

C Affinity fraud is a tool used by criminals to gain the trust of victims by claiming to be members of the same identifiable group, such as a religious affiliation, race, national origin, or profession, or to have similar interests.

Which of the following is NOT true regarding a registered representative of a member firm who is called to active duty in the Armed Forces of the United States? A Their registration will remain in force during their service B They are allowed to receive continuing commissions during their service C Their continuing education requirements will remain in force during their service D Their registration will become inactive during their service

C FINRA has no desire to penalize individuals for serving in the nation's military, therefore any associated person who is called to active duty will have their registration remain in force, albeit in a special inactive status, during their service. The associated person will not be responsible for completing continuing education during this time and are allowed to receive certain compensation, including continuing commissions.

Through the Customer Identification Program (CIP), which of the following does not need to be verified? A Name B Physical address C Medicaid number D Date of birth

C Proper AML procedures include following the guidelines of the Customer Identification Program whereas financial institutions are required to implement procedures to verify the identity of each customer opening an account, maintain records used to identify the customer, and consult government-provided lists of known or suspected terrorists. Through the CIP, customer verification of name, date of birth, physical address, and tax ID number will all be accomplished. Non-U.S. citizens must provide a passport and U.S. tax identification number to open an account.

Which of the following statements is correct regarding outside business activities of a registered representative? A The RR must obtain their firm's written permission prior to engaging in any outside employment B The RR must notify their employer of all paid and volunteer activities performed after hours C The RR must notify their employer of any outside employment D The RR must only notify their employer if an outside job is securities related

C RRs are required to notify their employers of all outside employment, whether or not securities related. Volunteer work is not covered under this rule.

An RR has failed to complete the regulatory element of the securities industry continuing education program within the required time frame. Which of the following is true regarding this situation? A The employer must terminate the RR's employment B A 120-day extension will automatically be granted C The RR's registration will be inactive D Employment status will not be affected unless the RR also fails to complete the firm element

C RRs are required to take regulatory element training on the second anniversary of their initial securities registration and every three years thereafter (2nd anniversary, then 5th anniversary, then 8th anniversary, then 11th anniversary, etc.). Brokers failing to complete the training within a 120-day grace period from their anniversary date will have their registrations deemed inactive. RRs with an inactive status may not perform in any capacity that requires a securities registration. They are also prohibited from collecting compensation tied to their registration (i.e., commissions, etc.).

The Customer Protection Rule pertains to: A Partners of the broker-dealer B Member broker-dealers C Broker-dealer customers D Officers and directors of the broker-dealer

C Under SEC Rules, broker-dealers must ensure the safekeeping of customer funds and securities. This Customer Protection Rule does not apply to other broker-dealers, partners, officers, or directors having accounts with the firm. The firm is required to obtain and hold all customer funds and securities in a timely and efficient manner, while abiding by all settlement and delivery rules. The concern is the proper segregating, recordkeeping, and accounting of customer funds and securities in situations where the firm can use them in the conduct of their business. For example, if they are held within a margin account.

How many days does a firm have to provide a retail customer a Form CRS upon request? A 60 B 90 C 30 D 45

C P.209/210 Existing retail customers opening new accounts must receive Form CRS prior to the new account opening. Firms must update their form CRS with the SEC within 30 days of the event causing a material change. Customers must receive the updated Form CRS within 60 days. Firms must deliver Form CRS to a retail customer within 30 days of a request. The recordkeeping requirement for Form CRS is 6 years from date of last use for broker-dealers and 5 years for investment advisers.

Which of the following is an example of a private securities transaction? A A registered representative sells a customer a very special mutual fund which is sponsored by a well-known fund family that has a selling agreement with the firm B A registered representative sells a customer a whole life policy through an outside insurance company C A registered representative buys interests in a limited partnership for their own investment account after notifying the firm and did not receive any compensation D A customer wishes to buy a variable annuity from a company with which their registered rep's BD does not have a selling agreement, the rep contacts the insurance company directly and makes the sale

D A private securities transaction occurs when an RR sells securities to customers without going through the rep's employing BD.

Broker-dealers must provide customers with all the following information at account opening, and at least once per calendar year, except: A FINRA's website address B Hotline number for FINRA's BrokerCheck C A statement regarding the availability of an investor brochure that includes information describing FINRA's BrokerCheck D BrokerCheck website address

D Broker-dealers must supply customers with the following information at account opening and least once per calendar year: FINRA's BrokerCheck hotline number; FINRA's website address; and a statement regarding the availability of an investor brochure that includes information describing FINRA's BrokerCheck. There is no website address for BrokerCheck, instead BrokerCheck can be accessed through the FINRA website.

A customer has made several large cash deposits into their account at the firm. Their registered representative suspects money laundering. Which of the following statements is correct? A A CTR must be filed within 48 hours of all deposits exceeding $10,000 B A CTR must be filed within 5 calendar days for all deposits exceeding $10,000 C A CTR must be filed within 48 hours of all deposits exceeding $5,000 D A CTR must be filed within 15 calendar days for all deposits exceeding $10,000

D FinCEN requires that firms file a CTR within 15 calendar days of receiving deposits of more than $10,000 of currency. In addition, as a registered representative you should also look for any activities in an account that seem suspicious and involve $10,000 or less. Suspicious transactions of $10,000 or less require that the firm file a Suspicious Activity Report (SAR).

A customer has made several large cash deposits into their account at the firm. Their registered representative suspects money laundering. Which of the following statements is correct? A A CTR must be filed within 48 hours of all deposits exceeding $5,000 B A CTR must be filed within 5 calendar days for all deposits exceeding $10,000 C A CTR must be filed within 48 hours of all deposits exceeding $10,000 D A CTR must be filed within 15 calendar days for all deposits exceeding $10,000

D FinCEN requires that firms file a CTR within 15 calendar days of receiving deposits of more than $10,000 of currency. In addition, as a registered representative you should also look for any activities in an account that seem suspicious and involve $10,000 or less. Suspicious transactions of $10,000 or less require that the firm file a Suspicious Activity Report (SAR).

What are the 3 stages of money laundering? A Interference, placement, manipulation B Theft, placement, transference C Misrepresentation, omission, torte D Placement, layering, integration

D Money laundering involves 3 independent and often simultaneous steps: -- Placement - Introducing funds to be laundered into the legitimate financial system -- Layering - Separating the proceeds of criminal activity from their origins through layers of complex financial transactions to hide the source of the funds -- Integration - Reintroducing the now clean funds back into the financial system by providing an apparently legitimate explanation for the illicit proceeds

Regulation Best Interest (BI) was created by: A Congress B NASAA C FINRA D The SEC

D P209 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 the 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.

A new RR is looking to build their business through networking with local professionals. At a recent golf outing, the RR met with an attorney who offered to direct business to the RR in return for "a share of the action." Under what circumstances may the RR split commissions with the attorney? A The initial commissions may be split with the attorney, but the attorney would not be entitled to any trailing commissions generated by the assets B The RR may only pay the attorney a maximum 1% finder's fee on any directed assets C If the RR has a written authorization from their manager D The RR may not split commissions with the attorney unless the attorney holds a valid FINRA registration and is employed by the same firm or an affiliate

D RRs are prohibited from splitting commissions with unregistered individuals or paying for referrals. RRs are, however, allowed to return the favor and direct business back to the referring professional.

A photocopy of a mutual fund magazine advertisement was used in a sales presentation for a mutual fund along with a prospectus. The article: A Would have to filed with FINRA and could not be misleading B Would have to be filed with FINRA at least 10 days before use C Would have to be filed with FINRA D Does not need to be filed with FINRA

D Reprints must be approved by a principal of the broker-dealer, but since they have been filed previously with FINRA, filing now is not required. The fund already had it approved by FINRA.

The maximum protection SIPC provides per separate customer is: A $100,000 B $750,000 C $250,000 D $500,000

D SIPC is designed to protect the investing public. SIPC coverage provides each separate customer with protection up to $500,000, of which no more than $250,000 can be for cash balances.

A registered representative has decided to help their cousin sell units of a condominium limited partnership for which the RR will be compensated. Which of the following is not required by FINRA rules? A The transactions must be recorded on the broker-dealer's books B The RR must receive written permission to perform these activities from her employer C The RR must provide written notification of these activities to her employer D The RR must receive FINRA approval to perform these activities

D Since limited partnership interests are securities, such transactions would be private securities transactions. Under FINRA rules, the actions that must be taken depend on whether the RR is being compensated for the transaction. If the RR will receive compensation, the rep must give their firm written notification of involvement and receive written permission to participate in the transaction. The transaction must be recorded on the broker-dealer's books and supervised in the usual fashion.

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: A $15,000 or more B $100,000 or more C $50,000 or more D $5,000 or more

D Suspicious Activity Reports (SARs) include detailed information about transactions that are or appear to be suspicious. A SAR needs to be filed within 30 calendar days with FinCEN if a financial institution suspects such activity involving at least $5,000 or more.

A registered representative meets with a potential client that was referred by the RR's accountant. After careful consideration, the client decides to invest in a variable annuity. How may the commission be split in this sale? A The RR may split the commission with the accountant who referred the client B The RR may split the commission with another employee at the BD that holds a state insurance license C The RR may split the commission with the client D The RR may split the commission with another employee of the BD that holds a Series 6 or 7 in addition to the state insurance license

D The sale of a variable annuity requires the representative to hold the FINRA Series 6 or 7 in addition to the state insurance license. To be able to share commissions with another registered representative both must be associated with the same BD or an affiliated BD. Under no circumstances may commissions be paid to unregistered persons.

Regulation S-P does not require a broker-dealer to provide a privacy notice to each: A Consumer, prior to disclosing any information to a nonaffiliated third party B Customer, on an annual basis C Customer, at the time the relationship is established D Consumer, on an annual basis

D Under Regulation S-P, a consumer is an individual (or that individual's legal representative) who obtains or has obtained a financial product or service from a financial institution that is to be used primarily for personal, family, or household purposes. A customer is a consumer who has an ongoing relationship with the financial institution. So, a consumer who obtains products or services from a broker-dealer on a one-off basis is not a customer. Since there is no ongoing relationship with consumers who are not customers, they do not receive an annual privacy notice.

unlawful Representation SEC "No Approval" Clause

It is unlawful to say or imply that the SEC approves of any investment; this disclaimer MUST BE AT THE FRONT OF PROSPECTUS Anyone soliciting securities by use of a prospectus containing false or misleading information, or omitting material information, may be held liable. Criminal penalties may be imposed for anyone offering securities through fraud or misrepresentation.

3 steps of money laundering

Placement - Introducing funds to be laundered into the legitimate financial system. Layering - Separating the proceeds of criminal activity from their origins through layers of complex financial transactions to hide the source of the funds. Integration - Reintroducing the now clean funds back into the financial system by providing an apparently legitimate explanation for the illicit proceeds.

USA PATRIOT Act

Requires that broker-dealers (and every financial) institution establish an anti-money laundering program

Suspicious Activity Report

Used to report known or suspected violations of law observed by financial institutions and has been instrumental in enabling law enforcement to initiate or supplement major money laundering or terrorist financing investigations and other criminal cases

Retail communications

any printed or electronic communication directed to more than 25 retail investors in any 30-day period. A retail investor is any party other than an institutional investor. All individuals, including accredited individuals, are considered retail investors. Retail communications include sales literature and advertising.

Bank Secrecy Act (BSA)

authorizes the Treasury to require financial institutions, including broker-dealers, to keep records and file reports about the source, volume, and movement of funds into and out of the country and through domestic financial institutions.

A registered representative that works in state A wishes to mail sales materials to a potential client in state B. Which of the following statements is true? A The representative may send the materials without restriction B The representative must inform the potential client that sales materials cannot be mailed but are available on the firm's website C The representative may only send materials across state lines if a prospectus is included in the mailing D The representative is not permitted to send sales materials outside of the state

c Sales materials cannot go across state lines unless a prospectus accompanies the material. p211

If a broker-dealer suspects that they are dealing with a specially designated national (SDNs) based on a check with the Office of Foreign Assets Control (OFAC), they must do all the following, except? A Report within 10 days of occurrence B Check OFAC's list C Contact the Federal Bureau of Investigations (FBI) D Block or freeze the assets associated with any account

c The Office of Foreign Assets Control (OFAC) publishes such a list of individuals and companies associated with certain targeted countries. It also lists individuals and entities such as terrorists and narcotics traffickers who are not country specific. Together, these individuals and companies are called specially designated nationals (SDNs) and U.S. persons are generally prohibited from dealing with them. Financial institutions must regularly check OFAC's list, block or freeze assets of any SDNs on the list and report these incidents within 10 days of occurrence. The broker-dealer would not be responsible for contacting the FBI.

When must investment advisory firms deliver the customer relationship summary form (Form ADV Part 3)? A At the time of any retail customer securities transaction B At the time of making a recommendation of a retail customer account type C To retail customers prior to placing any orders D To retail customers before or at the time the advisory contract relationship is established

d Investment advisory firms must deliver the document to retail customers before or at the time the advisory contract relationship is established. Broker-dealers must deliver the document 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.

Currency Transaction Report (CTR)

must be completed by the financial institution to file reports of deposits, withdrawals, exchanges of currency, or other payments or transfers involving a transaction in cash totaling more than $10,000. Identity of the person(s) involved in the transactions, including the Social Security number, date of birth, address, and other described methods of individual identification The identity of the individual conducting the transactions (if different than the person involved in the transaction) The amount and type of transaction(s) The financial institution where the transaction(s) takes place The report must be filed within 15 days CTRs must be filed within 15 days of cash transactions, including layering, of $10,000 or more.

Suspicious Activity Report (SAR)

to report known or suspected violations of law or suspicious activity observed by financial institutions subject to the Bank Secrecy Act (BSA). The SAR has been instrumental in enabling law enforcement to initiate or supplement investigations into major money laundering or terrorist financing, as well as other criminal cases. As part of their anti-money laundering training programs, broker-dealers must train RRs and other employees to detect suspicious activities, or red flags that may indicate money laundering. As an example, a customer wishes to engage in transactions that are inconsistent with their stated objectives or that lack economic sense. SARs must be filed within 30 days of a suspicious activity involving $5,000 or more.

Sales literature

type of retail communication where the broker-dealer controls the distribution of the material. It is provided to a targeted audience, such as group emails, text messages, and form letters to more than 25 prospects. Research reports and brochures are other examples of sales literature.

Correspondence

written or electronic communication that is targeted to one individual. SENT TO 25 OR FEWER IN 30 DAYS must be reviewed by a principal of the member firm. They do not need to be pre-approved by a principal if they have a training program in place and do not need to be filed with FINRA. They are subject to spot checks by FINRA.