Series6 UNIT 1 Final Exam
FINRA Rule 2210 requires firms to file certain communications at least 10 business days prior to first use and to withhold them from use until any changes specified by the Advertising Regulation Department have been made. These certain communications would include all of the following EXCEPT: A. A retail communication in which the only reference to security futures is contained in a listing of services of a firm B. A retail communication concerning any registered investment company that includes self-created rankings C. Retail communications that include bond mutual fund volatility ratings D. Retail communications concerning security futures
A. A retail communication in which the only reference to security futures is contained in a listing of services of a firm
Which of the following is false regarding the filing of communications with the public? A. All advertisements concerning government securities must be filed with FINRA within 10 business days of first use B. A firm must provide with each filing the actual or anticipated date of first use, the name, title and CRD number of the registered principal who approved the advertisement or sales literature and the date that the approval was given C. FINRA Rule 2210 requires that if a firm has filed with FINRA a draft version or "story board" of a television or video advertisement the final filmed version must be filed with FINRA within 10 business days of first use or broadcast D. Each firm's written and electronic communications are subject to spot-check procedures, and firms must provide requested information to FINRA with the time period
A. All advertisements concerning government securities must be filed with FINRA within 10 business days of first use
All of the following are true regarding mutual fund retail communications EXCEPT: A. An application to invest may be contained in a mutual fund advertisement B. Communications may not imply that a broker/dealer's activities, products or business conduct has been endorsed by any regulatory body C. Advertising that refers to mutual fund 'rankings' must disclose whether the ranking takes into account sales charges, the fund category and the number of funds in the category D. Retail communications must be approved by a registered principal and be retained for three years
A. An application to invest may be contained in a mutual fund advertisement
An institutional communication is which of the following? A. Any written (including electronic) communication that is distributed or made available only to institutional investors, but it does not include a firm's internal communications B. Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 day calendar period C. Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period D. Any written (including electronic) communication that is distributed or made available to 25 or fewer prospective retail investors within any 30 day calendar period
A. Any written (including electronic) communication that is distributed or made available only to institutional investors, but it does not include a firm's internal communications
FINRA Rule 4512 requires a customer's account information to contain which of the following? I. Customer's name II. Customer's address III. Customer's net worth IV. Customer's highest level of education attained A. I and II B. I, II and IV C. I, II, III and IV D. I, II and III
A. I and II
If a broker/dealer affiliated with a bank sells securities, they must state which of the following? I. That the securities sold or purchased are not insured by the FDIC II. That the securities are not deposits or other obligations of the financial institution nor are they guaranteed by the financial institution III. That the securities are subject to investment risks, including possible loss of the principal invested IV. That securities sold or purchased are deposits of the financial institution A. I, II and III B. II only C. III only D. I, III and IV
A. I, II and III
Testimonial must disclose: I. That it is a paid testimonial if more than a $100 payment is made II. The past can be used to predict the future III. The testimonial may not be representative of the experience of other customers IV. The testimonial is no guarantee of future performance or success A. I, III and IV B. III and IV C. I and IV D. I, II and IV
A. I, III and IV
FINRA requires a firm that has not previously filed advertisements with FINRA to file its initial advertisement with FINRA's Advertising Regulation Department at minimum 10 business days prior to use for a period of one year. This one year period of time begins: A. On the date reflected in the Central Registration Depository (CRD) system that the firm's FINRA membership becomes effective B. At the time of initial filing C. When the broker/dealer first filed Article of Organization in their home state D. When form BD is first filed
A. On the date reflected in the Central Registration Depository (CRD) system that the firm's FINRA membership becomes effective
Which of the following is false? A. Retail communication distributed after a closed-end fund's IPO period do not have to be filed with FINRA's Advertising Regulation Department within 10 business days of first use B. All retail communications concerning closed-end registered investment companies must be filed with FINRA within 10 business days of first use C. Retail communications concerning registered investment companies must be filed with FINRA within 10 business days of first use D. Retail communications concerning direct participation programs must be filed with FINRA within 10 business days of first use
A. Retail communication distributed after a closed-end fund's IPO period do not have to be filed with FINRA's Advertising Regulation Department within 10 business days of first use
A customer's account is closed. How long must the firm preserve records related to the closed account under FINRA rules? A. Six years B. Two years C. Four years D. Three years
A. Six years
Records related to communications must include all of the following EXCEPT: A. The name of the person who prepared the communication B. Information concerning the source of any statistical table, chart, graph or other illustration used in the communication C. The name of any registered principal who approved the communication and the date that approval was given D. A copy of the communication and the dates of first and (if applicable) last use
A. The name of the person who prepared the communication
If an associated person is the subject of a written complaint involving allegations of theft, or misappropriation of funds or securities, or forgery, the member firm must notify FINRA promptly, no later than: A. 30 business days B. 30 calendar days C.10 business days D. 15 calendar days
B. 30 calendar days
Which of the following would be required to follow the Telephone Consumer Protection Act? A. A non-profit organization B. A broker/dealer's call center C. A political organization D. A public school
B. A broker/dealer's call center
Which of the following would be considered a correspondence? A. A seminar handout provided to more than 25 retail investors within a 30 calendar-day period B. A seminar handout provided to 25 or fewer retail investors within a 30 calendar-day period C. Sales scripts intended for use with retail customers D. A market letter distributed to more than 25 retail investors within a 30 calendar-day period
B. A seminar handout provided to 25 or fewer retail investors within a 30 calendar-day period
A retail communication is which of the following? A. Any written (including electronic) communication that is distributed or made available to 25 or fewer prospective retail investors within any 30 day calendar period B. Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 day calendar period C. Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period D. Any written (including electronic) communication that is distributed or made available to 25 or fewer existing retail investors within any 30 day calendar period
B. Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 day calendar period
In making a comparison which of the following would be allowable? A. Comparing an equity fund to a fixed income fund B. Comparing a mutual fund to a ETF C. Comparing an emerging markets fund with an international fund D. Comparing a stock fund to a bond fund
B. Comparing a mutual fund to a ETF
Which of the following required prompt notification to FINRA, no later than 30 calendar days? I. An associated person of a member has been found to have violated insurance laws II. An associated person of a member has been found to have violated commodities laws III. An associated person is a defendant in a civil litigation or arbitration and the judgment or award was for $15,000 or less IV. A member firm is a defendant in a civil litigation or arbitration and the judgment or award was for $25,000 or less A. I, II, III and IV B. I and II C. I, II and III D. II and III
B. I and II Explanation There are many situations that require prompt notification to FINRA. If an associated person is found to have violated any securities-, insurance-, commodities-, financial- or investment-related laws, rules, regulations or standards of conduct of any domestic or foreign regulatory body, self-regulatory organization or business or professional organization, that would require prompt notification to FINRA, in no less than 30 calendar days. In order for the notification to FINRA to be prompt in the event of a civil litigation, the amount of the judgment or award must be greater than $15,000 when a registered representative is involved and greater than $25,000 when the firm is involved.
Dr. Jack Barbera gives a testimonial for Mutual Fund Company XYZ's Pharmaceutical Fund. He has his doctorate in Art History. Which of the following would be true? A. Since he has a Ph.D. he is considered to have experience necessary to offer a valid opinion B. This would be considered misleading and improper use of a testimonial under FINRA rules C. If he receives less than $1,000 in compensation it is not considered a paid testimonial D. This is perfectly legal
B. This would be considered misleading and improper use of a testimonial under FINRA rules
Which two of the following are true regarding retail communications? I. An appropriately registered principal of the firm is required to approve each retail communication before the earlier of its use or filing with FINRA II. Firms are not required to approve prior to use any retail communication that does not make any financial or investment recommendation or otherwise promote a product or service of the firm III. A supervisory analyst may approve retail communications concerning options IV. A supervisory analyst may approve retail communication concerning securities futures A. II and III B. I and IV C. I and II D. III and IV
C. I and II Explanation: FINRA Rule 2210 requires that an appropriately registered principal of the firm approve each retail communication before the earlier or its use or filing with FINRA. Retail communications that do not make any financial or investment recommendation or otherwise promote a product or service of the firm are not required to be pre-approved prior to use, but must be pre-approved prior to filing with FINRA's Advertising Regulation Department. A Series 16 supervisory analyst is allowed to approve retail communications on products that the person has technical expertise in. A supervisory analyst may not approve retail communications concerning options, security futures or municipal securities unless the supervisory analyst also holds other registrations.
The BrokerCheck program allows clients to find information about which of the following persons? I. Brokers II. Broker/Dealers III. Investment Advisers IV. Investment Adviser Representatives A. III and IV B. I and IV C. I, II, III and IV D. I and II
C. I, II, III and IV
Any retail communication seen on an ATM screen promoting the name or services of the financial institution where securities transactions may be done must include which of the following disclosures? I. Not FDIC Insured II. No Bank Guarantee III. May Lose Value IV. Guaranteed by the Broker/Dealer A. I, II and IV B. II and III C. I, II, and III D. I and IV
C. I, II, and III Explanation: Retail communications, including Automated Teller Machine ("ATM") screens must include these disclosures displayed in a conspicuous manner: Not FDIC Insured; No Bank Guarantee; and May Lose Value.
Which of the following are true regarding communications? I. FINRA's advertising department approves communications II. Communications must be approved prior to use by a principal of the member firm III. Past performance may indicate that the past can be used to predict the future IV. Communications must be kept on file by the member firm for a period of three years from the date of last use A. I and III B. I and IV C. II and IV D. III and IV
C. II and IV Explanation: FINRA's advertising department does not approve any communications. Communications must be approved prior to use by a principal at the member firm. The member firms must keep all communications used on file for a period of three years from the date of last use. Past performance may never be used to predict the future in any communication.
All of the following are true regarding mutual fund communications EXCEPT: A. It includes seminar scripts B. It includes form letters and photo copies of articles sent to prospective clients C. It may imply that past performance will be repeated in the future D. It may include performance data, including current yield and total return
C. It may imply that past performance will be repeated in the future
Under FINRA Rule 4512, the term "maintain" is used to reflect customer account information that is current or in use. What term is used to describe customer account information that is no longer current or in use? A. File B. Copy C. Preserve D. Maintain
C. Preserve
All of the following are excluded from filing with FINRA's Advertising Regulation Department EXCEPT: A. Retail communications that do not make any financial or investment recommendations or otherwise promote a product or service of the firm B. Prospectus C. Television commercials D. Tombstone ads
C. Television commercials Explanation: You are looking for which of these must be filed with FINRA. A firm's television commercials would be required to be filed with FINRA within 10 business days of first use.
All of the following are true regarding retail communications and correspondence EXCEPT: A. Limited securities principals may only approve communications for Investment Company and variable products B. Blind recruiting advertisements do NOT require the member firm's name C. Retail communications generally include advertisements D. FINRA's advertising department must approve all advertising
D. FINRA's advertising department must approve all advertising
Member firms who have not previously filed advertising with FINRA must file their initial advertisement at least ____ days prior to first use and must continue to file all of their advertisements ____ days before use for a period of one year. A. 20; 30 B. 10; 20 C. 5; 5 D. 10; 10
D. 10; 10
Under FINRA Rule 2210 which of the following properly defines a correspondence? A. Any written (including electronic) communication that is distributed or made available to 25 or fewer existing retail investors within any 30 day calendar period B. Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 day calendar period C. Any written (including electronic) communication that is distributed or made available to 25 or fewer prospective retail investors within any 30 day calendar period D. Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period
D. Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period Explanation: FINRA Rule 2210 does not differentiate between existing and prospective retail customers. Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 day calendar period is considered a "correspondence." Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 day calendar period is considered a "retail communication."
Which of the following is NOT true regarding correspondence? A. It does not include e-mail sent to more than 25 retail customers B. It includes an e-mail sent to one particular client C. It includes instant messages sent to 25 or less retail customers D. Each piece of correspondence must be reviewed and approved by a principal
D. Each piece of correspondence must be reviewed and approved by a principal
Which of the following is/are true regarding a discretionary account maintained by a member for a customer? I. Transactions excessive in size or frequency are prohibited II. Discretionary power must be given in writing in advance to a stated individual III. When a client specifies type and quantity of security to purchase, written discretionary authority is not needed over timing and price IV. Discretionary trades require prompt approval in writing by a duly designated principal A. I and II B. II, III and IV C. I and IV D. I, II, III and IV
D. I, II, III and IV
Which two of the following are true regarding the use of an illustrative rate regarding variable life? I. Hypothetical illustrations may be used to predict the future II. Hypothetical illustrations may not be used to predict the future III. In order to use a 12% rate, a zero rate must also be used IV. In order to use a 15% rate, a zero rate must also be used A. I and III B. I and IV C. II and IV D. II and III
D. II and III
A prospective client has asked to be placed on the firm's internal do-not-call list. That person will remain on the list for how long? A. Ten years B. Five years C. Three years D. Indefinitely
D. Indefinitely
Which of the following is NOT true? A. Market letters and research reports are considered to be retail communications B. A correspondence is a communication made available to 25 or fewer retail customers C. Telephone book ads come under the definition of retail communications D. Prospectuses are considered to be communications regulated under FINRA Rule 2210
D. Prospectuses are considered to be communications regulated under FINRA Rule 2210
All of the following are true EXCEPT: A. A firm's website is considered to be a retail communication B. An email sent to more than 25 retail customer is considered to be a retail communication C. An email sent to 25 or fewer retail customers is considered to be correspondence D. Retail communications and correspondence are subject to prior approval by the firm's registered principal
D. Retail communications and correspondence are subject to prior approval by the firm's registered principal Explanation: The firm's retail communications are subject to the prior approval of a registered principal, correspondence is only subject to review by the principal.
Under FINRA Rules, customer account information that is changed must be kept for how long after the change? A. Three years B. Four years C. Two years D. Six years
D. Six years
ll of the following are true about a mutual fund prospectus EXCEPT: A. RRs may not alter a prospectus in any way, nor tell a customer to disregard its contents B. A hyperlink to the prospectus will satisfy the prospectus delivery requirements for mutual funds that are advertised on the Internet C. A prospectus must be given in an unsolicited transaction no later than the due date of confirmation D. The SEC evaluates the accuracy and adequacy of the information in a prospectus
D. The SEC evaluates the accuracy and adequacy of the information in a prospectus
Which of the following is not required in a correspondence or retail communication under FINRA Rule 2210? A. Disclosure of any relationship between the firm and any non-member or individual who is also named in the communication B. When the communication includes other names, it must reflect which products and services are offered by the firm C. Prominent disclosure of the firm's name D. The date the firm began FINRA membership
D. The date the firm began FINRA membership
Retail communications and correspondence that present the performance of a non-money market mutual fund must disclose: A. The portfolio holdings B. The total NAV of the fund C. The effects of inflation D. The fund's maximum sales charge and operating expense ratio as set forth in the fund's current prospectus fee table
D. The fund's maximum sales charge and operating expense ratio as set forth in the fund's current prospectus fee table
Which of the following is incorrect regarding firm communications? A.Performance projections are prohibited, but hypothetical illustrations of mathematical principals are allowed B. Information may be placed in a legend or footnote only in the event that the placement does not inhibit an investor's understanding of the communication C. They must be based on principles of fair dealing and good faith, be fair and balanced, provide a sound basis for the evaluation of the facts regarding any particular security or type of security, industry or service D. They can include false, exaggerated, unwarranted or misleading statements
D. They can include false, exaggerated, unwarranted or misleading statements
Which two of the following are true regarding the discussion of a firm's FINRA membership? I. Use of the FINRA logo is allowed by the member firm II. A firm may include "FINRA member" on their website III. If a firm refers to their FINRA membership, they must include a link to the FINRA website in relative proximity to the reference IV. Only firms that have been members of FINRA for more than five years may reference "FINRA member in good standing" on their website
II and III