SIE Unit 4

A BD may give other firm's employees gratuities without violating the rules, provided the compensation's total value does not exceed...

$100

All of the following are eligible to apply for FINRA membership...

-a penny stock dealer -a municipal bond broker -an investment banker

Which of the following constitute a private securities transaction, or "selling away"...

-a registered representative help an old school friend issue securities for a small business under formation -a registered representative help an acquaintance sell some inherited stock certificates without the acquaintance becoming a customer of the firm

Fingerprint records are required for each of the following employees of a registered broker-dealer...

-a registered representative who sells or offers to sell municipal or government bonds -a clerk who handles customer physical securities -those whose duties are limited to supervising clerks who handle the books and records of the firm

Each of the following activities would require prior written notification by an associated person to the employing broker-dealer...

-acting as a real estate sales agent, limited to the sales of individual homes only -part-time work parking cars on the weekend at a local racetrack -offering to sell a limited partnership interest in an oil & gas drilling program

Firms applying for FINRA membership are required to agree to...

-be in compliance with all federal securities laws -pay dues, assessments, and other charges the association levies

The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following...

-don't know (DK) procedures -settlement and ex-dates -good-delivery procedures

All of the following are required when completing Form U-4...

-employment history for the past 10 years -legal name and any aliases used -date of birth

A person may not act as a registered representative or principal unless FINRA's eligibility standards regarding training, experience, and competence are met. In all of the following instances, a person may be statutorily disqualified from FINRA membership...

-expulsion by the CBOE for violations of trading floor rules -disciplinary sanctions by a financial regulator in the United Kingdom -willful misstatements made in an application for membership

Continuing Education (CE) requirements are a part of the securities industry's ongoing commitment to furthering the knowledge base for registered representatives. Which of the following CE requirements are needed by a registered representative?

-firm element training -regulatory element training

A registered representative has left a firm and joined another. The new firm must obtain a copy of the Form U-5 filed by the old firm. Where might the new firm obtain a copy of the form?

-from the new employee -from FINRA's central registration depository

One of the FINRA conduct rules is concerned with private securities transactions. Under that rule, it would be CORRECT to state that...

-if the member approves the registered representative participating in a transaction for compensation, it must treat the transaction as if it is being done on its own behalf by entering the transaction on its own books and supervising the associated person during the transaction -if the member disapproves the registered representative's participation in a transaction for compensation, the associated person may not participate in it

All of the following regarding the firm element of a broker-dealer's continuing education requirement are TRUE...

-it is applicable to both registered representatives and registered principals -it comprises training for those who have direct contact with the public -it must take into account the scope of the member firm's business

In general, the first industry form that a new applicant for registration sees is the Form U-4. This lengthy form requests information about the applicant's...

-name including any aliases -10 year employment history

Reporting requirements for representatives and principals who are to be registered with FINRA include filling out a Form U-4 when the individual is hired. All of the following are required to make the registration effective...

-providing a 10-year employment history and 5-year residency history -passing the appropriate qualification exams -providing names and all aliases used

All of the following associated persons engaged in the investment banking and securities business are considered registered representatives...

-someone who trains others to supervise, solicit, or conduct business in securities -an assistant officer who does not function as a principal -someone who supervises, solicited, or conducts business in securities

Registered representatives must complete or satisfy each of the following...

-state registration requirements -the firm element -the regulatory element

During a discussion with a customer about a potential investment opportunity involving securities, standing alone, all fo the following would likely be permissible...

-the RR pessimistically implies that an investment has a good chance of losing money as well as gaining, because the product might not have a market -the RR shows the customer a brochure with a chart showing best and worst case scenarios for product development over the next year -the RR points out, correctly, that the maximum possible loss on this particular investment is probably smaller than the maximum possible gain

Which of the following would be unacceptable reasons for an officer of a member firm to make a contribution to the election campaign of a political candidate?

-the candidate has promised to steer business to the officer's firm -the candidate is a close relative of a potential customer of the firm

All of the following people working for a registered broker-dealer would be required to be fingerprinted...

-the chief compliance officer (CCO) -the director of training -a clerk handling all incoming mail

If an arbitration agreement has not been signed under which 2 of the following circumstances would a dispute between a FINRA member firm and a retail customer go to arbitration?

-the dispute cannot otherwise be resolved to the satisfaction of both parties -the customer requests that the dispute go to arbitration

A broker-dealer wants to give an employee of another firm a gift. This is permitted provided all of the following conditions are met...

-the gift or compensation has the employing member firm's prior approval -the gift or compensation doesn't exceed the annual $100 limit -the gift or compensation is not conditional on sales

All of the following statements about a home office are TRUE...

-the member firm must authorize the representative to open a home office -a home office is subject to a premise visit & review by principals of the firm and FINRA examiners -a home office may be widely advertised as a place of business

Regarding registered representatives working from their residence, commonly known as their "home office", all of the following would be TRUE...

-the office would be subject to a premise visit and review by a principal of the firm -the office is subject to a premise visit by FINRA examiners as often as they see fit -home office address and telephone numbers may be used for normal advertising purposes

An investment company wishes to provide incentives for registered representatives of several broker-dealer firms to sell their investment products. The company proposes to send some selected representatives to a sales training seminar. Which of the following would be acceptable features of the trip?

-there is an incidental tour the representatives may attend at their own expense -the representatives must obtain their employing firm's permission to attend

A "free lunch" seminar is advertised among senior citizens who may be looking to improve the results of their investment portfolio. Which of the following activities by the registered hosts of the seminar would be deemed a potential violation?

-use of a designation such as Chartered Senior Advisor, a largely unknown designation -the representative is introduced as someone approved by FINRA to answer questions from senior investors

The minimum number of principals that a member firm of FINRA may have is...

1

The Adviser's Act of 1940 specifically deters gaining political favor via contributions made to candidates, officials, or political parties. As such, if a political contribution is made to any of these entities, then under the Act, the firm may NOT provide advisory services to any government these individuals or parties represent for how long?

2 years

When a registered person leaves the Securities business, FINRA retains jurisdiction over that person for how long?

2 years

An amended Form U-5 must be filed and a copy sent to the former employee within how many days of discovery of the inaccuracy?

30

Updates to the Form U-4 such as a change in address, and that do not point to disciplinary action must be made promptly but no later than...

30 days

The securities industry is highly regulated, and as such, it is important for broker-dealers to keep detailed records. If a customer complaint has been received regarding the actions of a registered representative, it will be maintained at the office of supervisory jurisdiction for a period of...

4 years

Information on the Form U-4 is extensive and includes names (aliases) and addresses in addition to which of the following?

5 years of residency and 10 years of employment history

Members and non-members alike can look into a broker's service qualifications record by accessing which of the following services?

Broker Check

Accusations of FINRA conduct rule violations will be heard and handled under the...

Code of Procedure

To register an associated person with FINRA, a member firm will fill out and submit which of the following forms?

Form U-4

All of the following are part of FINRA's manual regarding employee conduct and reportable events EXCEPT...

Sales Practice Code

In the event that ta customer complaint is received it is essential that the appropriate personnel are notified immediately. Which of the following need not be notified or only notified regarding specific scenarios?

The Financial Industry Regulatory Authority

Joe Jonas, a registered representative with Foxtail Advisors, has received an adverse ruling from a FINRA Department of Enforcement Hearing. He believes the DOE has misapplied a rule and wants to appeal the decision. He would file his appeal with...

The National Adjudicatory Council (NAC)

All of the following people working for a registered broker-dealer would be required to be fingerprinted EXCEPT...

a driver assigned to high net-worth clients

All of the following are eligible to apply for FINRA membership EXCEPT...

a real estate broker

Fingerprint records are required for each of the following employees of a registered broker-dealer EXCEPT...

a receptionist greeting customers and directing them to the appropriate registered representative within the office

A mutual fund company may offer non cash compensation to associates of broker-deals firms in the form of attendance at a meeting or convention, provided that...

a record of compensation and meeting details is kept by the attendee member's firm

Which of the following violates the FINRA conduct rules?

allowing a former registered representative to keep a securities license with your firm, even though no business is expected to transpire

A municipal finance professional (MFP) is...

an employee of a FINRA member engaged in municipal security representative activities such as underwriting and trading

Firm element training requires member firms to prepare training how frequently?

annually

Each of the following activities would require prior written notification by an associated person to the employing broker-dealer EXCEPT...

becoming a limited partner in an oil and gas drilling program

An individual has been a registered representative with a national firm for the past 3 years. Another member firm makes an attractive offer in an attempt to lure this individual to join them. In order to do so, the paperwork necessary would be...

both a form U-5 from the previous employer and a Form U-4 from the new one

Before submitting an application to enroll, part of the process for an associated person to engage in the investment banking or securities business, is to have the member firm that sponsors them ascertain the individual's...

business reputation, character, education and experience

All associated persons must be fingerprinted if they handle...

cash and securities

The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following EXCEPT...

communications with the public

A person may not act as a registered representative or principal unless FINRA's eligibility standards regarding training, experience, and competence are met. In all of the following instances, a person may be statutorily disqualified from FINRA membership EXCEPT...

conviction of a DUI resulting in a fine and probation

Registered representatives who have not completed their regulatory element training in the prescribed time frame will have their registrations...

deactivated by FINRA until the requirements of the program are met

Reporting requirements for representatives and principals who are to be registered with FINRA include filling out a Form U-4 when the individual is fired. All of the following are required to make the registration effective EXCEPT...

disclosure of conviction of a spouse employed by a financial institution

All of the following are required when completing Form U-4 EXCEPT...

educational degrees

A broker-dealer may allow a registered representative to work from home - that is to have a "home office". If this is the case, the registered representative must...

expect the office to be treated like any branch office

FINRA's conduct rules are designed to promote...

fair and ethical trade practices when dealing with the public

The firm element of a broker-dealer's continuing education requirement must be undergone by all registered persons who...

have direct contact with the public

Should a registered representative enter into a private securities transaction that would entail earnings compensation, the employing member will...

have the opportunity to approve or disapprove of the associated person's participation

All of the following statements about a home office are TRUE EXCEPT...

home offices are restricted to servicing existing customers only

Which of the following is TRUE regarding a registered person who wishes to move from one broker-dealer to another?

in no circumstances can a registration be transferred from one firm to another

All of the following regarding the firm element of a broker-dealer's continuing education requirement are true EXCEPT...

it is prepared by FINRA for the member firm to administer

Passive investments do not fall under the definition of an outside business activity. which of the following investments would be considered a passive investment?

limited partnership unit

Automatic disqualification for registration from FINRA may occur if...

misstatements are willfully made in an application for membership

Those persons employed by a FINRA registered broker-dealer to do nothing other than provide training for its associated persons...

must be registered as a principal

Someone responsible only for training associated persons at a FINRA member firm...

must be registered as a principal of the firm

A municipal securities dealer has just made a contribution to the mayor's reelection campaign. How long must the firm wait before it can enter competitive bids on proposed bond issues by the city?

no waiting period

While an associated person may work for an entity other than the member firm, the employing member firm's permission is...

not required

One way that distributors of mutual funds attempt to encourage BDs and their registered representatives (RRs) to include their funds in recommendations to clients is to provide educational seminars. FINRA's Conduct Rules permit this activity as long as the sponsor does not...

offer reimbursement for the travel expenses of the attendee's spouse

Registered broker-dealers must have fingerprint records for most of their employees and for which of the following?

partners

Noncash compensation exceeding the $100 annual limit to another member firm's employee is...

permitted if occassional

Industry rules regarding political contribution intended to preserve investor confidence and market integrity apply to contributions made to...

political parties, candidates for office, and elected officials

FINRA rules regarding outside business activity (OBAs) require that...

prior written notice to the employing firm be provided

You overhear a discussion about a registered representative (RR) being disciplined because of "selling away". Which of FINRA's Conduct Rules was violated?

private securities transactions

A written customer complaint has been received by a broker-dealer, alleging that the customer's signature was forged on a document. The broker-dealer must report this to FINRA...

promptly but no later than 30 calendar days

Regarding registered representatives working from their residence, commonly known as their "home office", all of the following would be TRUE EXCEPT...

prospects would not be allowed to visit and be on the premises at this location

Associated persons who wish to enter into a private securities transaction for which they will receive no compensation must...

provide prior written notice to their employer

A commonality of all self-regulatory organizations (SROs) is that they all require their members and associated persons to...

register with them

A registered representative has a customer who is interested in utilizing options strategies such as spreads and straddles. The RR's firm does not offer options transaction as part of their existing business model. As such, the RR directs the customer to open an account through another broker-dealer. This would be known in the securities industry as...

selling away

FINRA is concerned about potential conflicts of interest in providing incentives or rewards in providing incentives or rewards for selling sponsor's product. Which of the following situations regarding a product sponsors product training or education for outside registered representatives would FINRA disallow?

spouses included in the invitation with travel expenses paid for

Registered representatives must complete or satisfy each of the following EXCEPT...

the Form U-5

If an associated person is barred by the SEC, no broker-dealer firm may allow that person to associate with it, unless...

the SEC expressly permits it

Fingerprint cards are required by the SEC to be filed with...

the US Attorney General

All of the following associated persons engaged in the investment banking and securities business are considered registered representatives EXCEPT...

the chairman of the board

A representative of a dealer who solicited municipal securities business form an official of an issuer contributes $275 to the official's city council re-election campaign during the general election. Under what circumstances would the contribution invoke a ban on the dealer's municipal securities business with that issuer?

the dealer seeks to engage in a negotiated underwriting with the issuer

When a new associated person is hired at a broker-dealer firm, which of the following is responsible for seeing that Form U-4 is completed and filed?

the employing broker-dealer firm

If a registered representative is involved in a securities transaction outside the scope of employment with the firm, a practice known as "selling away", and will receive compensation for it, which of the following must see that the representative is properly supervised for the transaction?

the employing firm

If an associated person is disciplined for violating SEC rules & regulations, and is ultimately suspended by the SEC, the member firm where the person is affiliated must report the suspension to...

the exchanges where the firm is a member

In which fo the following circumstances would a firm be denied FINRA membership?

the firm has been expelled or suspended by the foreign equivalent of an SRO

A broker-dealer wants to give an employee of another firm a gift. This is permitted provided all of the following conditions are met EXCEPT...

the gift or compensation is preapproved by the firm's SRO

During a discussion with a customer about a potential investment opportunity involving securities, standing alone, all of the following would likely be permissible EXCEPT...

the registered representative points out only that a tech firm has a brilliant product idea and the CEO has advanced degrees in science

Failure to complete the regulatory element continuing education requirement within the allotted time period will result in...

the registration being deactivated until the requirements are met

Associated persons or registered representatives who want to work outside of their existing employment with their current broker-dealer may do so if they provide prior written notice to the member. In which of the following would notice not be required?

they will be involved in extensive fundraising activities for a charitable institution

Mary Alice McVey, a registered representative with a FINRA member broker-dealer has recently remodeled her home and now has an area with a private entrance that she would like to use instead of commuting each day to her office 20 miles away. Under FINRA rules...

this would be permitted with FINRA's approval

FINRA has a continuing education requirement with the goal of making sure that all registered personnel are aware of industry changes. If a registered representative has just observed her 2nd anniversary in the industry and did the required element CE, the next time she will be required to sit fo the regulatory element is...

three years from now

If a broker-dealer firm wishes to become a FINRA member firm, it must make its application...

to the FINRA district office where the applying firm has its home office

After receiving a written complaint letter form a client, a registered representative should...

turn the complaint over to the appropriate supervisor or principal

When an employee is either terminated from, or willfully leaves a member firm, Form U-5 must be filed. Under these circumstances, which of the following is TRUE?

under either circumstance, the employing firm is responsible for filing Form U-5

An individual would most likely be statutorily disqualified from working in the securities industry for which of the following reasons?

willful failure to disclose personal bankruptcy or unsatisfied liens

When is the electronic filing of all information on customer complaints by broker-dealers with FINRA due?

within 15 days of the end of each calendar quarter