Series 6 Missed Questions
Which of the following communications are subject to principal approval before first use? A) Letter to an insurance company recommending a specific security for investment B) Form letter sent to 10 prospective retail customers every week C) Mutual fund summary prospectus D) Quarter-page advertisement in your local newspaper announcing the opening of a second local branch office
B. Form letter sent to 10 prospective retail customers every week Form letters or group emails more than 25 retail investors within a 30-day period constitutes retail communication and must be preapproved. In this case, 10 letters per week (for a total of 40 in 28 days) exceeds 25 in a 30-day period. A mutual fund summary prospectus is prepared by the issuer, not the broker-dealer and as such is not subject to approval by the firm. The announcement of a second location does not promote a product or service of the firm and therefore pre-approval is not required.
Which of the following pieces of sales material is exempt from routine spot-checking by FINRA? A) A public communication that simply offers a specific security at a specific price B) An independently prepared reprint that has been materially altered since first published C) Radio commercials D) Telemarketing scripts
A. A public communication that simply offers a specific security at a specific price Material that makes no claims for a security, but simply states its price, is exempt from spot-checking.
Which of the following is a form of retail communication? I. A form letter sent to more than 25 prospective retail customers within a 30-day period II. A letter to a prospect outlining the details of a recent meeting III. An email sent to 30 banks promoting a new service of the broker-dealer IV. A form letter sent to 20 prospective retail investors and 20 existing customers within a 30-day period A) I and IV B) I and III C) II and IV D) II and III
A. I and IV Retail communication is defined as "any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period." Emails sent to banks represent an institutional communication and the single letter to a prospect represents a correspondence.
Your firm has prepared some institutional sales material on several of the securities it deals in and has provided it to three mutual funds. One of the fund managers calls your firm to ask for some extra copies of the material, because he would like to send it to some of his investor friends. This request: A) may not be complied with if your firm wishes to continue to treat the material as institutional communications. B) may be complied with as long as the adviser will not profit from any orders that result. C) may be complied with, as long as the copyright notice on the sales material is prominently displayed. D) may not be complied with because there is no guarantee that time-sensitive information will still be valid by the time the fund manager's friends receive it.
A. may not be complied with if your firm wishes to continue to treat the material as institutional communications. Institutional communication is just that: institutional. A member firm may not distribute such material to anyone who is not an institutional investor and may not treat material as institutional if the firm has reason to believe that it will be, or has been, forwarded to anyone who is not an institutional investor.
Which of the following forms of written communication must a principal approve before use? A) A Letter to a customer confirming an annual account review appointment B) A Preliminary prospectus C) A Letter sent this month to 50 prospective customers offering advice about a stock D) An Interoffice memorandum
C. A Letter sent this month to 50 prospective customers offering advice about a stock Letters sent to more than 25 retail investors within any 30-calendar-day period are considered retail communication and must be approved by a principal before use. Letters sent to fewer than 26 retail investors within a 30 calendar-day period are considered correspondence, which does not need prior approval, but it is subject to subsequent review.
Which of the following constitute a public appearance? 1. Interactive electronic forum. 2. Radio advertisement. 3. Television commercial. 4. Television interview. A) I and III. B) II and III. C) I and IV. D) II and IV.
C. I and IV A public appearance, which is considered a form of communication with the public, involves the personal presence of, or the possibility of interacting electronically with, an officer or other spokesperson of a firm.
Filing with FINRA is required for mutual fund-related A) independently prepared reprints B) correspondence C) retail communication D) institutional communications
C. Retail Communication Filing with FINRA is required only for retail communication. The other items are not filed, although they are subject to spot-checking requirements.
A registered representative places an ad in her church newsletter promoting her services as an expert retirement planner. Does this advertisement need to be pre-approved by a principal? A) No, because the ad only promotes a service, not a specific product. B) Yes, the ad will be defined as retail communication requiring pre-approval of a principal. C) Yes, but only if the newsletter is mailed as opposed to handed out on church property. D) No, the church is a non-profit organization, and as such, the ad is exempt from pre-approval requirements.
B. Yes, the ad will be defined as retail communication requiring pre-approval of a principal. Although it isn't specified that the ad will be received by more than 25 retail investors during a 30-day period, the best answer is the ad will be defined as retail communication requiring pre-approval of a principal. How retail communication is delivered in this question is not relevant (mailed as opposed to handed out); whether promoting a service or product, either would need pre-approval, and the fact that the ad is placed in a church newsletter provides no exemption from pre-approval requirements.
All of the following are true regarding institutional communications EXCEPT A) it includes communication to any entity with $50 million or more of total assets B) it must have prior principal approval C) supervisory procedures regarding institutional communications must be readily available to FINRA D) it may never be used with a retail investor
B. it must have prior principal approval Institutional sales material is not required to have prior principal approval, however each member shall establish written procedures for the review of institutional communications used by the member and its associated persons by an appropriately qualified, registered principal.
A generic ad for an investment company placed by a broker-dealer would contain: A) the name of the investment company, but not the name of the broker-dealer. B) both the name of the investment company and the broker-dealer. C) neither the name of the investment company nor the broker-dealer. D) the name of the broker-dealer placing the ad, but not the name of the investment company.
D. the name of the broker-dealer placing the ad, but not the name of the investment company. Generic advertising of investment companies presents a nonspecific introduction to investment company shares. A specific fund or investment company is not mentioned in generic advertising, but the broker-dealer who is placing the ad must be named.
All of the following are exempt securities EXCEPT: A) commercial paper. B) T-bills. C) bankers' acceptances. D.) municipal bond funds
D.) municipal bond funds While municipal bonds are an exempt security, bond funds are not; they are investment company securities which must be registered with the SEC prior to public sale.
Under which of the following terms does the underwriter act in a dealer capacity? A) Best Efforts B) Syndicate C) Selling Group D) Firm Commitment
D) Firm Commitment The firm commitment is the most commonly used type of underwriting contract. Under its terms the underwriter commits to buy the securities from the issuer. And as such is acting in a dealer capacity.
