Upgrade to remove ads
Only $35.99/year

Series 6 Chapter 3 Marketing, Prospecting and Sales

Terms in this set (82)

FINRA Conduct Rule
how we treat our customers
FINRA Communication with Public
Institutional communication, retail communications, correspondence, public appearance, independently prepared reprints, research reports, electronic communications
Uniform Practice Code
relates to dealings between FINRA member firms. How Members treat each other
FINRA Rule 5130
- Prohibits restricted person from buying IPO (does not apply to subsecuent new isssues)
- Restricted Persons (BD and its personel, Officers, Directors, Employees and registred Representatives.
- Immediate Family of restricted Persons
Spouse, Children, Parents, Siblings, in-laws, Person who recieved material support.
Restricted Persons
1) Member firms
2) Employees of members
3) Finders and fiduciaries acting on behalf to managing underwriter (includes attorneys, accts, ect)
4) portfolio managers, including person with authority to buy or sell for bank, savings and loan, insurance etc
5) person owning 10% or more
6) immediate family member of any mentioned person (aunts, uncles, grandparents excluded)
immediate family
Spouse
Children
Parents
Siblings
IN-Laws
Person who received material support
Not Restricted Persons
Grandparents, Nephews, Cousins, aunts and uncles
Rewarding Employees of Others (Gifts)
Limited to $100 per person per year
Excludes normal business expenses meals, sporting events, etc., Cost of business meeting, conference and seminars.
Gifts that you cant give
season tickets
Private Securities Transactions (Selling Away)
Selling securities that Broker dealer does not offer, must give firm written notification before engaging.
Must get APPROVAL from firm if paid on transaction. Broker dealer must run trades thru books and records
Opening Account With other Broker/Dealer
Must notify empolying firm and executing firm.
Executing firm notify employing firm and associted person before 1st trade
Executing firm sends duplicate trade confrimations to employing firm upon request.
Does not apply to RR opening an account
Outside Business Activity
RR's who engage in any outside business for compensation must provide prior written notice to their firms. Volunteer work not included. Must notify but not get approval
Sharing in Customer accounts
must be a joint account.
Principal and customer approves sharing.
Sharing proportional to financial contributions.
Borrowing or Lending to Customers
Not allowed!!
Unless Customer is in the business of loaning money and customer is an Immediate relative
Customer Mail Hold
two months hold for domestic travel and 3 months hold for international travel. Must be in writing for a the specific time
FINRA
Financial Industry Regulatory Authority is the largest SRO for securities firms in the US. Mission is to protect INVESTORS by making sure the industry operates fairly and honestly
Use of FINRA name
Firms can say member of FINRA not APPROVED by FINRA. FINRA LOGO cannot be used or prominent on your business cards
FINRA POLICIES
fall under 4 sets of rules
Code of Conduct
Code of Arbitration
Code of Procedure
Uniform Practice Code
Registered Rep or Associted Person Registration Requirements
Must submit a U-4 for registration with B/D pass their qualifying exam. Must register with their state and FINRA
U-4 Changes
address, employment, background questions. Must be submitted by 30 days of change
U-5
If changing firms. the terminating firm will submit U-5. within 30 days
Fingerprints and representatives records
must be kept for 3 years after termination
Rule 17f-2
Fingerprinting rule requires every person who handles customer records or money to get fingerprinted.
Client Records
Must be kept for 6 years
Form U-4
Extenisve and includes all of the following.
Name, Address, Aliases
5 year residence History
10 year employment history
Criminal and Civil history of charges.
DRP
Form required if you have any civil charges or criminal history
Supervision Rule
Must be assigned to an OSJ and must meet with them Annually. Each OSJ must be inspected at least annually
Continuing Commissions
practice of paying retired registered representatives and principals commissions on business written while still employed with the firm. And had a contract and is registered with FINRA
Information Provided to Investors
Annually Info describing Public Disclosure Program
FINRA public disclosure hotline
FINRA website address
FINRA Broker Check
Series 6 Exam
Investment Company/variable contract limited representative License. Allows rep to sell Open End Mutual Funds, New Issues of closed end funds and variable products. Prerequisite for 26
Series 6 RR CANT SELL
Stocks, Hedge Funds, ETF's
Series 7 License
General Securities Representative License. Allows rep to sell most all types of securities and may not sell commodities unless they have a series 3
Renewal
Must renew each year by the end of the year Dec. 31.
Non-renewal
requires retest
Firm Element Continuing Ed
required once a year annual compliance
Regulatory Element Continuing Education
required reps renewal date and then every 3 years after
Issuing Securites Primary Market
Straight from the horses mouth. When a company wants to raise capital they can sell equity in their company. Sold thorugh an IPO and sold at POP.
IPO
Intital Public Offering- stock available for sale when it first goes public.
POP
Public Offering Price price per share set by the company. Sold in lots of 100
Investment Banker/Underwriter
is broker/dealer hired to sell the shares to the public.
Underwriting Contracts
Best efforts, All or nothing, Mini Max, Stand By, Firm Commitment
Best efforts
Underwriter sells whatever they can, rest goes back to issuer. No risk.
All or None
UW doesnt sell all stock, IPO is cancelled. Issuer risk
Mini-Max
issuer sets a minimum that have to be sold for IPO to happen. Issuer risk
Stand By
underwriter purcahses the shares it could not sell
Firm Commitment
underwriter buys all shares upfront
Securities Act of 1933 (Paper Act)
Prospectus and statement of additional information
Prospectus
a summary of the registration that statement, contains important information concerning fund. Must be given to customer at time of solicitations
20 day cooling off period
A period of 20 calendar days following the filing of a registration statement with the SEC. No sales can be made but can take indications interest.
Red Herring
a preliminary prospectus distributed to prospective investors in a new issue of securities. Can be given in the cooling off period
SEC
neither approves nor dissapproves securities, only releases them for sale
Tombstone Ad
bare bones ad announce the sale used in media, newspaper. Exempt from prospectus requirement. Usually in a text box
Summary Prospectus
A summary prospectus is the disclosure document provided to investors by mutual fund companies prior to or at the time of sale. can be used for sale as long as there is access to Prospectus online
SAI (Statement of Additional Information)
must be given within 3 business days of request.
Prospectus updated
annually and cant be older than 16 months
Exempt from Registration
Municipal and Government securities, Non profits, public utilities, comercial paper and money market that mature in 270 days.
Regulation A
Exempts small companies (<$5 issue in 12 months). Companies must still file an offering statement and report the number of securities sold every 6 months going forward.
Regulation D
exempts private placements inclduing variable life insurance
Accredited investor
an organization or individual investor who meets certain criteria established by the SEC and so qualifies to invest in unregistered securities. worth more than 1 million.
FINRA Rule 5130
indentifies members of a security industry, immediate family, and closeley associated as restricted person. from buyinIPO
Bid Price
price that a dealer pays from another dealer
Asked Price or POP
price the public pays
Spread
Sales Charge
Market Making
a dealer can make a market or take a position in certain stocks by buying them in bulk to maintain inventory in advance without customer order
Trade Date
The recorded date of a securities transaction; this is also time at which the price and the quantity are determined.
Settlement Date
Date by which payment for the purchase of securities must be made; date by which delivery of securities sold must be made. completed when you are the owner.
decleration date
set by BOD date the dividend is declared
ex-dividend date
the date the securities will be purchased without a dividend. set by SRO
Record date
owner of the stock on record date entitled to dividend
Payment date
date dividend pays out
Regulation T
Regulates extension of credit to customers by broker/dealers.
Regulation U
Regulates the extension of credit to customers for the purpose of purchasing securities by banks and other lenders.
Investment Advisers Act of 1940
requires everyone who charges a fee to register. except Banks, lawyers acountants, teachers and engineers
Conduit Theory
IRS subchapter M, distibute 90% of net investment income to shareholders called regulated and only pay 10%or less
Alternate Minimum Tax (AMT)
IRS law make sure that investors w too many tax advantages are still paying
Gifts of securities
recpeints cost basis is the same as donors
wash sale
if an individual sells a security at a loss and then repurchases a similiar security in 30 days
Variable Annuity
Annuity that has a varying rate of return based on the mutual funds in which one has invested
Accumulation Period
The time before an annuitant's retirement during which the annuitant is making payments or investments in an annuity.
Annuitization
The point at which funds accumulated in an annuity are converted into periodic income payments beginning the annuity phase.
1035 Exchange
life to life, life to annuity, annuity to annuity are not taxed
Variable Life Policy
Policy loans are not taxed, cash surrenders are only a taxable gain. Upon death face amount is paid to beneficiary.
Sets found in the same folder