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FINRA RULES

Terms in this set (127)

All of the following statements are true regarding the U.S. securities markets EXCEPT:
A
FINRA has regulatory authority over the markets and market participants in the trading of all non-exempt securities
B
the Federal Reserve Board decides securities can be traded on margin
C
the Securities and Exchange Commission has regulatory authority over the securities markets and its participants
D
the MSRB has regulatory authority over the markets and market participants in the trading of all exempt securities
D
the MSRB has regulatory authority over the markets and market participants in the trading of all exempt securities

The MSRB only regulates the trading of municipal bonds - not U.S. Government or Agency bonds - so the statement that the MSRB regulates trading in all exempt securities is untrue.
Enforcement of regulations regarding trading of listed securities in the "Third Market" is performed by:
A
FINRA
B
NYSE
C
MSRB
D
FDIC
Finra
An individual who has successfully passed the SIE exam may:
A
only sell equity securities
B
only sell securities that are either issued or guaranteed by the U.S. Government or its wholly-owned agencies
C
only sell redeemable securities of investment companies registered under the Investment Company Act of 1940
D
not sell any securities until successfully completing the appropriate representative qualification exam
D
not sell any securities until successfully completing the appropriate representative qualification exam
Who does NOT have to be licensed in a broker-dealer?
A
President
B
Equity trader
C
ACATS clerk
D
Sales individual
C
ACATS clerk
Registered representatives may be compensated based on which of the following?

I Trading commissions paid by the brokerage firm to the representative
II Trading commissions paid by the customer to the representative
III Salary paid by the brokerage firm to the representative
IV Salary paid by the customer to the representative
I and III
Which statement is TRUE about a registered representative who wishes to take a second job under FINRA rules?
A
This action is prohibited
B
This action is permitted without restriction
C
This action requires the prior written approval of FINRA
D
This action requires the prior written approval of the member organization employer
D
This action requires the prior written approval of the member organization employer

For a registered representative to take a second job requires approval of the branch manager or other authorized person at the member firm under FINRA rules.
To take a second job, an employee of a FINRA member firm:

I must get written permission from his or her employer
II is not required to get written permission from his or her employer
III must amend his U-4 filing with FINRA and the SEC
IV is not required to amend his U-4 filing with FINRA and the SEC
I and III
Which of the following is NOT defined as an Outside Business Activity by FINRA?
A
A registered representative who helps out in his or her family's restaurant at night, only earning tips
B
A registered representative who is elected to the Board of Directors of her cooperative apartment house
C
A registered representative who volunteers to make solicitations of contributions to her church
D
A registered representative who teaches a course on financial literacy at a local community college
C
A registered representative who volunteers to make solicitations of contributions to her church

volunteering individuals or charity work does not have to be reported as an outside business activity
Under FINRA rules, which statement is TRUE about the gift limit from a registered representative to another person in the securities business or the financial news media?
A
No gifts are permitted
B
One gift of no more than $100 value to one person is permitted per year
C
Five gifts of no more than $100 value to one person are permitted per year
D
An unlimited number of $100 value gifts may be given to the same person in a year
B
One gift of no more than $100 value to one person is permitted per year
Under FINRA rules, a registered representative:
A
may borrow money from a customer only with the permission of FINRA
B
may borrow money from a customer only with the permission of the branch manager
C
may borrow money from a customer only with the permission of the customer
D
may not borrow money from a customer
D
may not borrow money from a customer

FINRA prohibits registered representatives from borrowing money personally from a customer. Exceptions to the rule are permitted if the customer is an immediate family member; if the customer is a "significant other" such as a live-in girlfriend or boyfriend; or if the customer is a bank, making the loan on the same conditions that it would give to anyone else.
As long as the firm has written policies and procedures covering borrowing from customers, a registered representative can borrow money without getting the firm's prior approval from a customer who is (a):
A
accredited
B
relative
C
roommate
D
neighbor
B
relative
A representative who has a bank as a client is permitted to borrow from that bank:
A
under no conditions
B
as long as the loan is documented in writing
C
as long as the loan is offered on the same terms and conditions as those that apply to the general public
D
without restriction because the bank is an institutional lender
C
as long as the loan is offered on the same terms and conditions as those that apply to the general public
What item given from a mutual fund sponsor to a registered representative is NOT considered to be "non-cash compensation"?
A
4 Super Bowl tickets
B
An all-expense paid trip to a resort hotel
C
An expense-paid trip to an educational conference
D
2 bottles of vintage wine valued at $200 each
C
An expense-paid trip to an educational conference
Which are permitted under FINRA rules?
I A registered representative accepts a $300 gift from a customer
II A registered representative pays for a $300 meal with a customer
III A registered representative gives a customer $200 tickets to a show
IV A registered representative accompanies a customer to a show, for which the representative paid $200 for the tickets
II and IV
A client of a registered representative refers a new potential customer. This customer is interested in purchasing an oil and gas limited partnership unit. What percentage of the purchase amount can the representative share with the referring client as a finder's fee?
A
0%
B
5%
C
10%
D
15%
A
0%

Registered representatives cannot share commissions, sales charges, or pay referral fees, to anyone other than another registered person at the same member firm.
The Firm Element component of the "Continuing Education" requirement:
I is administered by FINRA
II is administered by the FINRA-member employer
III must be completed annually
IV must be completed bi-annually
II and III

The Firm Element of the Continuing Education requirement obligates member firms to deliver annual training to all registered representatives on product, regulation, and compliance issues.
The Firm Element component of the "Continuing Education" requirement must be completed:
A
semi-annually
B
annually
C
bi-annually
D
tri-annually
B
annually
The Regulatory Element component of the "Continuing Education" requirement must be completed:

I on the registrant's 1st anniversary of registration
II on the registrant's 2nd anniversary of registration
III every 2 years after the initial review
IV every 3 years after the initial review
II and IV

The Regulatory Element of the Continuing Education requirement must be completed by registered persons on their 2nd anniversary of registration and every 3rd year thereafter. This involves completing a computerized "training experience" that covers relevant rules and regulations.
After completion of his or her first Regulatory Element review, a Registered Representative:
A
is not required to complete any further Regulatory Element reviews
B
must complete an annual Regulatory Element review thereafter
C
must complete a Regulatory Element review every two years thereafter
D
must complete a Regulatory Element review every three years thereafter
D
must complete a Regulatory Element review every three years thereafter
If a registered representative fails to complete the Regulatory Element of the Continuing Education requirement within the stated time period, that person:
A
must be immediately terminated by the employing member
B
will be fined by FINRA
C
must cease performing all of the functions of a registered representative
D
can apply for an extension from FINRA to complete the requirement
C
must cease performing all of the functions of a registered representative

have 120 days after the requirement to do the continuing education
Registered representatives are required to attend a compliance meeting at their firm:
A
annually
B
on their 2nd anniversary of registration and every 3 years thereafter
C
every 3 years
D
if the representative has been disciplined by the firm
A
annually
Which of the following statements are TRUE regarding a registered individual who recently left the employment of a FINRA member firm?

I The individual is allowed to maintain his license at another member firm without being employed by that firm
II The individual cannot maintain his license at another member firm without being employed by that firm
III The license remains active for an indefinite time period if the individual does not affiliate with another member firm
IV The license lapses if the individual remains unaffiliated for 2 years
II and IV
A registered representative has spent 10 years working at his broker-dealer and has sold customers many mutual funds that pay trail commissions from 12b-1 fees. The registered representative is thinking about leaving his firm to do charitable work. He would like to collect the trail commissions on the funds after he terminates his employment from the firm. Is this possible?
A
No, because only individuals who are currently registered can collect commissions
B
No, because the representative must currently be servicing accounts to receive commissions
C
Yes, if there is a written agreement between the member firm and the registered representative that is executed prior to termination
D
Yes, because the representative will now be doing charitable work
C
Yes, if there is a written agreement between the member firm and the registered representative that is executed prior to termination
A retiring registered representative (RRR) has a book of business that he wishes to sell prior to the time of his retirement. Another representative at the same firm enters into a contract to buy the RRR's book of business, paying 50% of commissions earned for the next 10 years. Which statement is TRUE about this?
A
This is prohibited under FINRA rules because registered representatives can only share commissions with other representatives at the same firm and not with ex-representatives who are not currently registered
B
This is prohibited because the "book" of business is not the property of the RRR, rather it is the property of the member firm
C
This is permitted as long as the contract is completed prior to retirement and the RRR does not solicit new business, open new accounts, or service the accounts generating the continuing commission payments
D
This is permitted as long as the contract includes a mandatory termination clause in the event that the buying representative leaves the employ of the broker-dealer
C
This is permitted as long as the contract is completed prior to retirement and the RRR does not solicit new business, open new accounts, or service the accounts generating the continuing commission payments

The intent is to allow RRRs to "sell" their book of business for a share of future commissions generated by the RRR's accounts, giving that individual retirement income.
FINRA specifically permits this (it is kinda a nice thing!) as long as the contract is entered into before retirement and the RRR contractually agrees not to solicit new business, open new accounts, or service the accounts generating the continuing commission payments.
A registered representative is about to retire and has asked a younger representative in the same branch office if she wants to buy his book of business. The younger representative is very interested and the two RRs have negotiated a sale price and have agreed in a written contract that continuing commissions will be paid to the retiring representative for a period of 5 years following retirement, based on the clients named as of the date of retirement. Which statement is TRUE about such an arrangement?
A
The retired representative is only permitted to be paid continuing commissions if the firm maintains the registration of that individual for the 5-year life of the agreement
B
Such an arrangement is a permitted private contract as long as the contract is executed prior to the retirement date
C
The written agreement must be filed with the FINRA District office at least 10 business days prior to its effective date
D
Such an arrangement is prohibited because commissions cannot be paid to unregistered individuals
B
Such an arrangement is a permitted private contract as long as the contract is executed prior to the retirement date
Notification to FINRA is required for all of the following EXCEPT:
A
a written customer complaint is received about a registered employee misappropriating customer funds
B
a registered representative is arrested for assault and battery
C
a registered representative is committed to a mental institution
D
a registered representative is indicted under the Securities Exchange Act of 1934 for "insider trading" violations
C
a registered representative is committed to a mental institution
A registered representative who had been doing well for many years has now hit some hard times. He is having trouble making the payments on the auto loan arranged by the dealer and voluntarily surrenders the car to the dealer where it was purchased. The dealer has agreed to sell the car, apply the proceeds to the loan balance, and write-off any balance due. Does this have to be reported to his broker-dealer and be reported on his U4 Form?
A
No
B
No, because the representative is not personally responsible for any loss on the sale of the property
C
No, because securities are not involved in the transaction
D
Yes, because he had made a compromise with a creditor
D
Yes, because he had made a compromise with a creditor
A registered representative is employed by a broker-dealer that is a publicly traded company, listed on the New York Stock Exchange. Which statement is TRUE? The registered representative:
A
may recommend the purchase of his employer's stock to established customers, but not to new customers
B
may recommend the purchase of his employer's stock to new customers, but not to established customers
C
may accept unsolicited orders for his employer's stock; but cannot solicit orders for, nor recommend, buying that security
D
cannot accept solicited or unsolicited orders for his employer's stock; nor can he or she recommend buying that security
C
may accept unsolicited orders for his employer's stock; but cannot solicit orders for, nor recommend, buying that security
A registered representative is employed by a broker-dealer that is a subsidiary of a publicly traded company, listed on the New York Stock Exchange. Which statements are TRUE?

I The registered representative may recommend the purchase of the parent company's common stock
II The registered representative cannot recommend the purchase of the parent company's common stock
III The registered representative may accept unsolicited orders for the parent company's common stock
IV The registered representative may not accept any orders - solicited or unsolicited - for the parent company's common stock
II and III
A customer instructs a registered representative to "Buy 100 shares of IBM whenever you think the price is right." Under industry regulations this order:
A
must be refused unless a written power of attorney is on file from the customer
B
can be accepted as given
C
is considered to be discretionary and must be approved by a branch manager prior to execution
D
is given the same treatment as a market order
B
can be accepted as given

This order states the number of shares to be bought and the security to be purchased. The registered representative is left to choose price and time of execution. This is the same as a "not held" order and can be accepted as given. If the representative were to choose the number of shares or the security, then the order would be discretionary, and would require a written power of attorney on file from the customer.
Which of the following decisions by a registered representative require specific customer authorization?

I Determining price and time of execution in a cash account
II Determining price and time of execution in a margin account
III Determining price and the number of shares traded in a cash account
IV Determining price and the number of shares traded in a margin account
III and IV
Which statement is TRUE?
A
A registered representative can sign the name of a customer on an arbitration agreement
B
A registered representative can sign the name of a customer on a margin agreement
C
A customer can sign her name on a trading authorization, allowing a registered representative to trade her account
D
A third party can sign the name of a customer on a joint account agreement
C
A customer can sign her name on a trading authorization, allowing a registered representative to trade her account
An order ticket is filled out and sent to the New York Stock Exchange floor for execution. After being executed on the floor, it is discovered that the account number is incorrect. Under FINRA rules, the order:
A
must be canceled
B
ticket can be corrected by the registered representative that took the order
C
ticket can be corrected by the Purchase and Sales Department
D
ticket can be corrected with the approving signature of the Branch Manager
D
ticket can be corrected with the approving signature of the Branch Manager
FINRA defines a "customer complaint" as one that is received by the member firm:
A
verbally
B
verbally or in writing
C
in writing or by e-mail
D
verbally, in writing, or by e-mail
C
in writing or by e-mail

FINRA defines a customer "complaint" as one received either in writing (e-mail is written) - screamers don't count.
Which of the following statements are TRUE about items reviewed or approved by a principal?

I Complaint letters received from customers must be reviewed by a principal
II Complaint letters received from customers do not have to be reviewed by a principal
III Internal documents of a brokerage firm must be reviewed by a principal
IV Internal documents of a brokerage firm do not have to be reviewed by a principal
I and IV
An existing client of your firm has changed his representative 3 times over the past 5 years. He has a reputation within the firm of being difficult to deal with and of being a known complainer. After having difficulties with his most recent representative, he has been transferred to you. In your first conversation with the client, he says to you: "I have been complaining because the other representatives could not get my fees down, but I'm sure you can get that fixed." You should:
A
take written note of the customer's complaint and discuss it with the appropriate department or supervisor in your firm
B
take no action because the customer's complaint was not in writing
C
take no action because it can be assumed that the previous representatives reported the customer's complaint
D
take no action because the customer complaint does not pertain to any violation of FINRA or SEC rules
A
take written note of the customer's complaint and discuss it with the appropriate department or supervisor in your firm
All of the following would be considered when determining a fair and reasonable commission or mark-up under the FINRA 5% Policy EXCEPT the:
A
difficulty of executing the transaction
B
level of service provided to the customer
C
dollar amount of the transaction
D
cost of the security to the broker-dealer
D
cost of the security to the broker-dealer

Among the things considered in determining the amount to charge are the difficulty of the trade; the level of service provided to the customer; and the dollar amount of the transaction. All commissions or mark-ups are based on the current market value of the security; not the cost of the security to the dealer.
The FINRA 5% Policy applies to which of the following?

I Mark-ups charged on purchases effected as a principal in over-the-counter securities transactions
II Mark-downs charged on sales effected as a principal in over-the-counter securities transactions
III Commissions charged on purchases and sales effected as agent in over-the-counter securities transactions
IV Commissions charged on purchases and sales effected as agent in exchange transactions
ALL the ABOVE
Under the FINRA Conduct Rules, a broker-dealer may charge a customer all of the following services EXCEPT:
A
collection of dividends on margin securities
B
safekeeping of securities
C
appraisals of securities in a customer portfolio
D
distributing proxies to holders of securities in margin account
D
distributing proxies to holders of securities in margin account

Regarding proxies (voting materials) on street name shares - these are given by the issuer to the brokerage firm that holds the shares; and the broker must send them to the beneficial owners of the stock (the margin customers). This expense is paid for by the issuer; therefore it cannot be charged to the customer.
Which of the following are violations of FINRA rules?

I Recommending the purchase of put options to protect a stock position from a downwards market move
II Sharing in the profits and losses of a customer's account
III Selling exempted securities to a customer with a written agreement to buy back the securities at a later date
IV Orally guaranteeing to buy back customer securities at a preset price
II and IV
Which of the following are violations of FINRA rules?
I Sharing in the profits and losses of a customer's account without contributing proportional capital
II Selling exempted securities to a customer with a written agreement to buy back the securities at a later date
III Orally guaranteeing to buy back customer securities at a preset price
I and III
A customer buys 100 shares of ABC stock at $20 per share. Two months later, the stock is quoted at $10.00 - $10.50. The registered representative that sold the stock to the customer offers to repurchase the shares at $18. Which statement is TRUE?
A
This is prohibited because the FINRA Conduct Rules do not allow customer accounts to be guaranteed against loss
B
This is prohibited because the registered representative is interpositioning himself between the customer and the current "inside" market
C
This action is permitted, as long as the principal approves in writing prior to the proposed trade
D
This action is permitted as a method of maintaining customer "goodwill" with the firm
A
This is prohibited because the FINRA Conduct Rules do not allow customer accounts to be guaranteed against loss
A customer has fully paid marginable securities in his vault at home that he wishes his brokerage firm to hold. Which statements are TRUE?
I The brokerage firm can charge for this service
II The brokerage firm cannot charge for this service
III The securities must be segregated and placed in safekeeping
IV The securities can be commingled with those of other customers
I and III
A brokerage firm is permitted to hold fully paid customer securities if the:
A
customer gives a full power of attorney to the brokerage firm and signs a rehypothecation agreement
B
brokerage firm segregates those positions from margin securities and places them in safekeeping
C
customer identifies in writing the specific securities that he wishes the brokerage firm to hold
D
brokerage firm sends the customer a written receipt for the securities being held
B
brokerage firm segregates those positions from margin securities and places them in safekeeping
Customer securities held in margin accounts:
A
can be commingled with other customer margin securities and used as collateral for a loan by the brokerage firm
B
can be commingled with fully paid customer securities and used as collateral for a loan by the brokerage firm
C
must be held in custody of the customer
D
must be segregated and placed in safekeeping
A
can be commingled with other customer margin securities and used as collateral for a loan by the brokerage firm
When an issuer wishes to conduct a shareholder vote as part of the annual meeting, the proxies are sent to beneficial owners holding shares in street name by (the)
A
shareholder relations department of the issuer
B
broker-dealer holding the shares
C
DTCC
D
transfer agent
B
broker-dealer holding the shares

Corporate reports sent by issuers to shareholders include annual audited financial statements and any proxies that require a shareholder vote - such as voting for the members of the Board of Directors. When stock is held in street name, the issuer does not know the identity of the beneficial owner. In this case, the issuer sends the reports or voting material to the broker-dealer, and the broker-dealer distributes them to the beneficial owners. The cost of distribution is paid by the issuer to the broker-dealer. The beneficial owners cannot be charged for this.
When an issuer wishes to distribute proxies to shareholders who have their shares held in margin accounts in street name, the distribution is performed by the:
A
issuer at the issuer's expense
B
issuer at the broker-dealer's expense
C
broker-dealer at the broker-dealer's expense
D
broker-dealer at the issuer's expense
D
broker-dealer at the issuer's expense
Under FINRA rules, a member firm is allowed to vote the stock of securities held in street name:
A
if the distributed proxy is not returned within 10 days of the annual meeting
B
if the distributed proxy is not returned within 20 days of the annual meeting
C
if the distributed proxy is not returned within 30 days of the annual meeting
D
under no circumstances
D
under no circumstances
On Wednesday, May 15th, a registered representative receives an order to sell 100 shares of ABC stock that has been "transferred and shipped" to the customer. Before executing the order, the registered representative must make sure the securities can be delivered by:
A
Thursday, May 16th
B
Friday, May 17th
C
Monday, May 20th
D
Tuesday, May 21st
B
Friday, May 17th

FINRA rules require that orders to sell cannot be accepted unless the firm has reasonable assurance that the securities can be delivered in 2 business days (regular way settlement). Two business days after Wednesday, May 15th is Friday, May 17th. Also, note that the location of the securities must be noted on the order ticket to sell.
A customer calls a registered representative to sell 500 shares of an over-the-counter stock and tells the representative that he wants the trade done privately - not in the public market. This is:
A
allowed without restriction
B
allowed with the oral approval of the principal
C
allowed if the trade is performed as "agent"
D
not allowed
D
not allowed

FINRA prohibits "private securities" transactions. Trades must be done with the knowledge of your firm in the public securities markets. The only way in which a "private" transaction can be effected is for the employee to get prior written approval of the broker-dealer (and the broker-dealer is not likely to do this!)
A customer wishes to open an account that will be used primarily to buy initial public offerings (IPOs). Which statement is TRUE regarding the proper procedure for prequalifying the account?
A
The customer must sign a representation letter that he or she is not restricted from buying IPOs
B
The registered representative must determine that the customer is not restricted from buying IPOs and must sign the new account form to demonstrate compliance
C
The branch manager must determine that the customer is not restricted from buying IPOs and must sign the new account form to demonstrate compliance
D
There are no special procedures to follow when opening an account that will purchase IPOs
A
The customer must sign a representation letter that he or she is not restricted from buying IPOs

In order for a customer to buy IPOs (Initial Public Offerings) of common stock, the customer must sign a representation letter that he or she is not restricted from buying the issue under FINRA rules (FINRA prohibits industry "insiders" from buying the issue from the underwriter). Annually thereafter, the customer must be sent a notice that the firm has the customer's representation on file that he or she is not restricted, and that if this has changed, the customer must notify the firm so that the account file can be amended.
FINRA's IPO purchase restrictions that prohibit industry personnel from buying new issues in the primary market apply to:

I Common stock offerings
II Preferred stock offerings
III Non-convertible bond offerings
IV Convertible bond offerings
I only
Which statements are TRUE?

I A registered representative is permitted to buy a new issue directly from the underwriter(s)
II A registered representative is prohibited from buying a new issue directly from the underwriter(s)
III A registered representative is permitted to buy a new issue once it starts trading in the secondary market
IV A registered representative is prohibited from buying a new issue once it starts trading in the secondary market
II and III
A registered representative is a 15% participant in an investment club formed by members of the local Elks Club. The Elks Club investment club has opened a securities account at ABC Brokerage. The account wishes to buy an IPO being offered by an underwriter. Which statement is TRUE?
A
The account can buy the issue without restriction
B
The account can buy the issue if the branch manager approves
C
The account can buy the issue if the registered representative agrees not to share in the profit on the position
D
The account is prohibited from buying the new issue
D
The account is prohibited from buying the new issue

Registered representatives are prohibited from buying new issues from underwriters. This is true for any account in which registered representatives or restricted persons have a greater than 10% participation as well. Thus, this account would be prohibited from buying the IPO.
An offer of IPO shares made to an officer of a publicly held company:
A
is prohibited under FINRA rules
B
is prohibited if the company is in the banking or financial services industry
C
is prohibited if the purpose of the offer is to get investment banking business from that company
D
is permitted as long as the officer signs an IPO letter
C
is prohibited if the purpose of the offer is to get investment banking business from that company

FINRA prohibits the "spinning" of IPO shares. This is a "quid pro quo" arrangement where a member firm gives officers of public companies IPO allocations in return for receiving underwriting business from that company (since the officers are in a position to direct that business to the member firm).
In order to get "M&A" business from a company that is looking to make an acquisition in the next month, an investment banker offers a new issue allocation to an officer of that company who is in a position to direct that business to the broker-dealer. This is:
A
permitted under FINRA rules since the officer as long as the company is not in the financial services business
B
permitted under FINRA rules as long as the officer agrees to hold the stock for a minimum of 6 months before selling those shares
C
prohibited under FINRA rules because all officers of publicly held companies are prohibited from buying IPO shares
D
prohibited under FINRA rules because this is "spinning"
D
prohibited under FINRA rules because this is "spinning"
A registered representative is approached by the president of an investment club to buy an IPO being offered by the representative's firm. Which statement is TRUE?
A
The investment club is a restricted purchaser and cannot buy the IPO
B
The investment club is not a restricted purchaser and may buy the IPO
C
The investment club is only permitted to buy the issue if it buys an insubstantial amount
D
The investment club is only permitted to buy the issue if its members certify that they are not restricted
B
The investment club is not a restricted purchaser and may buy the IPO

The FINRA IPO rule lists "restricted purchasers" that cannot buy common stock IPOs from underwriters. These are basically industry insiders, including member firms, their officers and employees, fiduciaries to member firms such as outside attorneys retained by broker-dealers, and institutional portfolio managers that are buying for their personal accounts. Investment clubs are not on the restricted list - they can buy common stock IPOs. One could argue that an "investment club" could be formed by industry insiders to get around the rule, but FINRA addresses this by stating that any account in which an industry insider has a greater than 10% ownership interest is restricted.
Who is permitted to buy an Initial Public Offering (IPO) from a member firm?
A
Self-supporting mother of a registered representative who is employed by that member firm
B
College-age brother of a registered representative who is employed by that member firm
C
Self-supporting ex-wife of a registered representative who is employed by that member firm
D
Non self-supporting minor daughter of a registered representative who is employed by that member firm
C
Self-supporting ex-wife of a registered representative who is employed by that member firm
A registered representative wants to speak to a group of clients about a private placement in a 2-year old company. The invited clients have a stated minimum net worth of $1 million. The representative is soliciting them to buy privately placed shares of the company because it is in a growth business due to the aging of the population in the U.S. - the company's business is the refurbishment of medical equipment in hospitals. In the Private Placement Memorandum (PPM), the company states that investors are expected to receive a 15% annual cash dividend and could also enjoy capital appreciation. What should the representative do before offering the security to these clients?
A
Nothing, because they all receive protection under anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934
B
Nothing, because all of the investors are accredited under Regulation D of the Securities Act of 1933
C
The registered representative should review the revenue and expenses as detailed in the PPM to see if it is feasible for the company to pay a 15% cash dividend
D
The registered representative must get a signed attestation from each attendee that they received the PPM
C
The registered representative should review the revenue and expenses as detailed in the PPM to see if it is feasible for the company to pay a 15% cash dividend

Note that if registered securities are being offered, this detailed "due diligence" investigation by the BD offering the investment is not required - it is only a requirement for private placement offerings (because in a registered securities offering, the issuer and underwriters perform the required due diligence). Also note that there is no requirement for a signed receipt that each attendee received a Private Placement Memorandum.
All of the following are prohibited practices under FINRA rules EXCEPT:
A
backing away
B
interpositioning
C
free riding
D
arbitrage trading
D
arbitrage trading
All of the following are violations of FINRA's Conduct Rules EXCEPT:
A
guaranteeing a customer account against loss
B
selling a customer an exempt security with a written agreement to buy back that security at a fixed price
C
making blanket recommendations of low price speculative stocks to customers
D
selling dividends to customers by inducing customers to buy stocks just prior to the ex date
B
selling a customer an exempt security with a written agreement to buy back that security at a fixed price

Choice B defines a repurchase agreement, which typically involves two government securities dealers; or the Federal Reserve and a government dealer. These are permitted, since they are essentially overnight loans of monies at a predetermined interest rate. Prohibited activities include guaranteeing a customer account against loss; making blanket recommendations of low price speculative stocks; and selling dividends to customers.
A communication sent to 30 retail clients and 10 institutional clients is defined as (a):
A
Correspondence
B
Retail Communication
C
Public Appearance
D
Institutional Communication
B
Retail Communication
A written or electronic communication made available to 25 or fewer existing or prospective clients
Correspondence
E-mail sent by a representative to an individual customer is considered to be (a(n)):
A
Advertising
B
Sales Literature
C
Correspondence
D
Retail Communication
C
Correspondence

Letters of an individual nature to a customer (whether written or electronic) are considered to be correspondence. The specific definition is a written or electronic communication made available to 25 or fewer existing or prospective retail customers.
A representative gives a seminar to investors, making a presentation about successful hedge fund strategies. It is attended by 10 retail clients and 20 institutional clients. FINRA defines this as:
A
an advertisement
B
a solicitation
C
a retail communication
D
correspondence
D
correspondence

Because this is a communication to 10 retail clients (the number of institutional clients is irrelevant), this is defined as "correspondence."
Which of the following is NOT defined as correspondence?
A
E-mail distributed to 15 existing retail customers
B
Seminar text for a speech that will be delivered to 30 prospective retail clients
C
E-mail sent to 10 prospective retail clients
D
Prospecting letter sent to 5 sales leads
B
Seminar text for a speech that will be delivered to 30 prospective retail clients
Which of the following would be considered to be a "retail communication"?
A
Direct mailing sent to 15 existing retail clients
B
Password-protected website maintained by a broker-dealer
C
Institutional communication
D
Correspondence to an individual client
B
Password-protected website maintained by a broker-dealer
All of the following are defined as "institutional clients" for purposes of the FINRA communications rules EXCEPT:
A
bank
B
investment company
C
insurance company
D
real estate company
D
real estate company

An institutional communication is defined as one that is distributed to an institutional investor - a bank, savings and loan, insurance company, registered investment company, registered investment adviser, employee benefit plan with at least 100 participants, government entity or a person with at least $50 million of assets for investment.
A representative is hosting 20 wealthy guests at a dinner seminar at a Michelin star-rated restaurant, and when coffee and dessert are being served, she intends to give a small talk about the potential benefits of investing in hedge funds. This is defined by FINRA as a(n):
A
retail communication
B
institutional communication
C
research report
D
public appearance
D
public appearance

FINRA describes a public appearance as a spontaneous, unscripted, live presentation to potential investors. These are not subject to FINRA filing rules and do not require prior principal approval (unless the firm requires this as an internal procedure).
Websites established by brokerage firms are considered to be:
A
advertising
B
sales literature
C
correspondence
D
educational material
A
advertising

Advertising: TV, radio, newsprint, billboards, websites, internet bulletin boards
In a communication to the public, a member firm:

A
cannot make reference to the FINRA name
B
can state that it is a member of FINRA
C
can stated that it is approved by FINRA
D
can state that it is endorsed by FINRA
B
can state that it is a member of FINRA

Member firms can only say that they are FINRA members. They cannot say that they are approved or endorsed by FINRA.
Which statement is TRUE?

A
In a communication to clients, a registered representative can say that he or she is a member of FINRA
B
In a communication to clients, a registered representative can say that he or she is a endorsed by FINRA
C
In a communication to clients, a member firm can say that it is a member of FINRA
D
In a communication to clients, a member firm can say that it is endorsed by FINRA
C
In a communication to clients, a member firm can say that it is a member of FINRA
Which of the following is defined as sales literature?
A
E-mail distributed to 15 existing retail customers
B
Seminar text for a speech that will be delivered to 30 prospective retail clients
C
E-mail sent to 10 prospective retail clients
D
Prospecting letter sent to 5 sales leads
B
Seminar text for a speech that will be delivered to 30 prospective retail clients

Sales Literature: Research reports, market letters or form letters delivered to more than 25 existing or prospective retail clients, scripted speeches delivered to more than 25 existing or prospective retail clients, password-protected websites
A firm has a social media account and a very satisfied client wants to post a testimonial on it. The client sends the proposed post to her representative, who edits it to make it more "impactful" and then returns to the client, who posts it on the firm's social media site. Under FINRA rules, this communication would be defined as (a):
A
correspondence
B
public forum
C
retail communication
D
3rd party post
C
retail communication

FINRA states that as long as the firm or representative has no involvement with a customer posting on a social media site, even one owned by the member firm, then it does not come under FINRA's communications rules. Then FINRA goes on to state that if the member firm or its representative writes or edits the social media post (FINRA calls this "entanglement") then it does come under FINRA 's communications rules. That is the case with this posting, and because it would be seen by the general public, it becomes a retail communication that must be approved in advance by a principal, and which can be required to be filed with FINRA.
A registered representative has a social media account on a site established by the member firm. A very satisfied client of the registered representative wants to post a good review, giving the representative 5 stars. The client sends the proposed review to the registered representative, who edits it and sends it back to the client to post. Under FINRA rules, this is an example of:
A
engagement
B
entanglement
C
entrapment
D
enablement
B
entanglement
Which of the following communications with the public MUST be approved in advance of use by a principal?

I Form letter to be sent to all customers that recommends allocating assets among stock, bond, and money market fund investments
II Advertisement placed in the local newspaper that states that "Now is the time to open an IRA account"
III Research report that recommends the purchase of ABC stock
IV Prospectus sent to customers who request information about a mutual fund
I, II, III
Which of the following would have to be reviewed by a principal?
I Letters recommending securities to all clients of a registered representative
II Complaint letters received from customers
III Form letters mailed to all customers
IV Form letters for internal use within a firm
I, II, III
A registered representative wishes to give a speech to a group of 35 potential retail clients at a restaurant. The speech is scripted and is a general discussion about investing in securities. Which statement is TRUE?
A
Registered representatives are prohibited from making speeches at locations other than the representative's branch office
B
A registered principal must be in attendance when the speech is given
C
Prior principal approval must be obtained and a copy of the speech must be retained in your firm's Office of Supervisory Jurisdiction
D
A copy of the speech script must be filed with the SEC at least 10 business days prior to the date the speech is to be given
C
Prior principal approval must be obtained and a copy of the speech must be retained in your firm's Office of Supervisory Jurisdiction
Which disclosure is optional when advertising a CMO Tranche?
A
Coupon
B
Minimum Denomination
C
Final Maturity Date
D
Average Life Of Investment
B
Minimum Denomination
If a client is paid less than $100 to give a testimonial about a broker-dealer's services, which statement is FALSE?
A
The fact that the testimonial may not be representative of the experience of other customers must be disclosed
B
The fact that the maker of the testimonial was paid must be disclosed
C
The fact that the testimonial is no guarantee of future performance must be disclosed
D
The fact that the testimonial is no guarantee of future success must be disclosed
B
The fact that the maker of the testimonial was paid must be disclosed
A client receives a $150 gift card from a broker-dealer for giving a testimonial about her highly positive experience with her registered representative. What is the broker-dealer NOT required to disclose if the testimonial is used in a retail communication?
A
The fact that the testimonial may not be representative of the experience of other customers
B
The fact that the maker of the testimonial was paid
C
Whether any guarantee of growth was made by the representative to induce the giving of the testimonial
D
The fact that the testimonial is no guarantee of future performance or success
C
Whether any guarantee of growth was made by the representative to induce the giving of the testimonial
A client receives a $75 gift card from a broker-dealer for giving a testimonial about her highly positive experience with her registered representative. What must the broker-dealer disclose if the testimonial is used in a retail communication?
A
The fact that the testimonial may not be representative of the experience of other customers
B
The fact that the maker of the testimonial was paid, along with the amount of compensation
C
Whether any guarantee of growth was made by the representative to induce the giving of the testimonial
D
The length of the time that the maker of the testimonial had an account with the broker-dealer
A
The fact that the testimonial may not be representative of the experience of other customers

The fact that the testimonial may not be representative of the experience of other customers.
Sales literature distributed by a member firm in connection with the promotion of a Business Development Company (BDC) offering:
A
is not required to be filed with FINRA
B
must be filed with FINRA 10 business days prior to distribution
C
must be filed with FINRA 10 business days after distribution
D
must be filed with FINRA 20 business days after distribution
C
must be filed with FINRA 10 business days after distribution

Retail communications that must ALWAYS be filed 10 business days AFTER first use are:
All other mutual fund retail communications;
CMO retail communications;
and DPP retail communications.
A registered representative wishes to give a seminar about investing in CMOs as a way for older investors seeking an income-producing investment in a low-interest rate environment without assuming a high level of risk. Which statement is TRUE about giving this seminar?
A
A registered principal must attend the seminar and such attendance must be documented
B
Any materials given to participants must be filed with FINRA no later than 10 business days after first use
C
The names of the attendees of the seminar must be recorded by the member firm and must be retained for at least 3 years
D
FINRA prohibits registered representatives from giving seminars about CMOs
B
Any materials given to participants must be filed with FINRA no later than 10 business days after first use
A registered representative would like to increase his production by working from home at nights and on weekends. As part of this effort, the representative wants to use his home e-mail account to send his customers information and recommendations. This action is:
A
permitted as long as the representative uses his personal e-mail account
B
permitted with the prior permission of the branch manager
C
not permitted because the member firm has no way of auditing the representative's personal e-mail account
D
not permitted because the representative has not registered his personal e-mail account with the SEC
C
not permitted because the member firm has no way of auditing the representative's personal e-mail account
Which statement is TRUE about the use of the FINRA name on a member firm's or associated person's website?
A
The FINRA name cannot be shown
B
The FINRA name must be shown
C
If the FINRA name is shown, it must be hyperlinked to the FINRA website
D
If the FINRA name is shown, it must be stated that FINRA does not sponsor the website
C
If the FINRA name is shown, it must be hyperlinked to the FINRA website
Under FINRA rules, a readily apparent reference to BrokerCheck and hyperlink to the BrokerCheck website is required:
A
on a member firm's initial webpage that is intended to be viewed by retail investors
B
on a member firm's web page that includes a professional profile of an individual registered person who conducts business with retail investors
C
on a member firm's web page that includes the professional profiles of a number of registered persons who conduct business with retail investors
D
on all of the above
ALL THE ABOVE
Under FINRA rules, if an institutional communication is distributed to retail clients:

I it is considered to be an institutional communication
II it is considered to be a retail communication
III it must be approved by a principal prior to distribution
IV it is subject to post use review and approval by a principal
II and III
Which statements are TRUE about a registered representative that wishes to promote him- or herself on the Internet?

I Participation in an Internet Chat Room is defined as advertising
II Participation in an Internet Chat Room is defined as a public appearance
III Creation of a Website or Internet Bulletin Board posting is defined as advertising
IV Creation of a Website or Internet Bulletin Board posting is defined as a public appearance
II and III
Under FINRA rules, a research report to be sent to customers must be prepared, or approved, by a:
A
supervisory analyst
B
financial analyst
C
branch manager
D
registered representative
A
supervisory analyst
A widely-followed research analyst is going to issue a "Buy" recommendation on a company. Prior to the release of the recommendation, the analyst and immediate family can:
A
buy the stock without restriction
B
buy the stock only if the purchase conforms to their normal investment profile
C
buy the stock only if the company is exchange listed
D
not buy the stock
D
not buy the stock

Once a research report has been widely distributed, the analyst who wrote the report and immediate family can buy that stock, subject to any restrictions on this placed by the employing member firm.
A research report on an issuer CANNOT be published by the underwriter of that issuer's securities for the time period encompassing:

I 10 days following the effective date for an initial public offering
II 25 days following the effective date for an initial public offering
III 10 days following the effective date for a secondary offering
IV 3 days following the effective date for a secondary offering
I and IV
The research department of a brokerage firm has prepared a buy recommendation for the common shares of a company. Which of the following is NOT required to be disclosed in the report?
A
That the firm makes a market in that company's shares
B
That the firm was a manager or co-manager in an equity underwriting of that company's securities within the past 12 months
C
That the firm received compensation from investment banking services rendered to that issuer within the past 12 months
D
That the firm recommends the purchase of a mutual fund which holds that issuer's equity securities
D
That the firm recommends the purchase of a mutual fund which holds that issuer's equity securities
Specific compliance approval is needed for a registered representative to send out all of the following to 40 retail customers EXCEPT:
A
3rd party research report on a stock not followed by the firm obtained by the representative
B
photocopy of a newspaper article about good stock picks
C
existing research report prepared by that firm
D
research report prepared by that representative about stocks that she likes
C
existing research report prepared by that firm
A FINRA member firm does not follow a particular stock and a registered representative wishes to obtain a 3rd party research report to send to 30 interested retail customers. Which statement is TRUE?
A
FINRA member firms are prohibited from using 3rd party research reports
B
3rd party research reports can be sent to customers if prior approval is obtained from FINRA
C
3rd party research reports can be sent to customers if prior approval is obtained from the Supervisory Analyst and the Compliance Officer of the firm
D
3rd party research reports can be sent to customers without any additional approvals required
C
3rd party research reports can be sent to customers if prior approval is obtained from the Supervisory Analyst and the Compliance Officer of the firm
A representative wishes to invite 30 prospective customers to a buffet dinner, to be followed by a presentation that the representative will make on investing. If the representative includes analyses of specific stocks in the speech; and the attendees use this information to determine whether to invest in those securities; then the:

I presentation is considered to be a research report
II presentation is not considered to be a research report
III representative is required to make all of the disclosures required of research analysts
IV representative is not required to make all of the disclosures required of research analysts
I and III
Regulation AC requires that research analysts at member firms MUST give a:
I written certification on each published research report
II written certification on each week's published research reports
III must give a blanket certification to all appearances made each month
IV must give a blanket certification to all appearances made each quarter
I and IV
A registered representative is prospecting customers for a new mutual fund being sponsored by his firm. All of the following information items mailed to customers must be accompanied by a prospectus EXCEPT:
A
letter stating the fund's objective(s)
B
sales literature that promotes the fund
C
research report recommending the fund
D
advertisement about the fund
A
letter stating the fund's objective(s)

Because mutual funds are "prospectus offerings," nothing can be sent to customers that can be considered an offer or advertisement of the security unless the material is preceded or accompanied by a prospectus. Sales literature, advertising, and research reports fall into the category of items that are "offers" of the security and must be accompanied by a prospectus.A letter simply stating the fund's objectives is not promotional and does not have to be accompanied by a prospectus. This type of communication is specifically exempted from the prospectus requirement under SEC Rule 135A.
A registered representative writes a letter to be sent as a general mailing to prospective customers, that recommends the purchase of a specific mutual fund. Which statements are TRUE?

I Each letter must include a copy of the fund prospectus
II The letter must be approved in advance by the principal
III The prospectus must be approved in advance by the principal
I and II ONLY

Prospectuses are required for any "offer" of a new issue that is not exempt from the provisions of the Securities Act of 1933. Every mutual fund share that is sold is "newly issued" by that fund, therefore mutual funds must be offered with a prospectus. A letter to customers that recommends the purchase of a mutual fund constitutes an "offer" of a new issue under the Securities Act of 1933. Any offer must be accompanied with, or preceded by, a prospectus. The prospectus need not be approved by the principal, since it is lawyer prepared and has been filed with the SEC; however, the solicitation letter to customers must be approved in advance by the principal.
A prospectus MUST accompany which of the following mailings to a customer?
I A research report written by the firm about a mutual fund that the firm sells
II An annual report issued by the corporation
III A report analyzing the effect of future budget deficits on market valuation
I ONLY
The use of which of the following is permitted in mutual fund advertising?
A
Performance projections
B
Performance guarantees
C
Performance charts
D
Performance predictions
C
Performance charts
A member firm prepares a piece of sales literature that compares 2 different mutual funds that have similar objectives. Comparisons of all of the following can be made in the sales literature EXCEPT:
A
management fees charged by the funds
B
past performance of the funds
C
projected earnings of the funds
D
liquidity of the fund's investment holdings
C
projected earnings of the funds
An elderly customer that is interested in buying a mutual fund asks her registered representative to highlight the most important information in the prospectus, so that it is easier for her to understand the merits and risks of the investment. Which statement is TRUE about this request?
A
The registered representative should honor the customer's request
B
The registered representative could not normally honor such a request, but is permitted to do so in this case because of the customer's advanced age
C
The registered representative cannot honor the customer's request, but can offer to answer any questions that she has about the information in the prospectus
D
The registered representative cannot honor the customer's request and is not permitted to answer any questions that she has about the information in the prospectus
C
The registered representative cannot honor the customer's request, but can offer to answer any questions that she has about the information in the prospectus
Which of the following is NOT required to be retained on file by a broker-dealer?
A
Customer complaints
B
Trade confirmations
C
IPO prospectuses
D
Correspondence
C
IPO prospectuses
Which time(s) must be recorded on unexecuted order tickets?

I Time of order receipt
II Time of order execution
III Time of order cancellation, if canceled
I and III
All of the following time stamps are on an order ticket EXCEPT the time of:
A
order entry
B
trade execution, if executed
C
order cancellation, if canceled
D
trade reporting to the Consolidated Tape
D
trade reporting to the Consolidated Tape
Under FINRA rules, copies of order tickets must be kept for:
A
6 months
B
2 years
C
3 years
D
5 years
3 years
Which statement is TRUE?
A
Both customer trade confirmations and account statements must be retained for 3 years
B
Customer trade confirmations must be retained for 3 years and customer account statements must be retained for 6 years
C
Customer trade confirmations must be retained for 6 years and customer account statements must be retained for 3 years
D
Both customer trade confirmations and account statements must be retained for 6 years
B
Customer trade confirmations must be retained for 3 years and customer account statements must be retained for 6 years
A customer opened an account with a member firm 5 years ago. Under FINRA rules, which records must the firm have retained for this entire time period?
A
Written customer complaints
B
Trade confirmations
C
Account statements
D
Order memoranda
C
Account statements
To make a public offering of a Direct Participation Program, which statement is TRUE?
A
No registration is required because the security is exempt
B
The issue must be registered with FINRA
C
The issue must be registered with the SEC
D
The issue must be registered with the MSRB
C
The issue must be registered with the SEC

Public offerings of direct participation programs are "non-exempt" offerings under the Securities Act of 1933, and must be registered. The MSRB has no jurisdiction over direct participation program offerings, since these are not municipal securities. DPP offerings are regulated by FINRA, but they are not registered with FINRA.
The sale of Direct Participation Programs is regulated by (the):

I Securities Act of 1933
II State Blue Sky Laws
III FINRA Rules
IV MSRB Rules
I, II, III
Which of the following gifts is permitted to be accepted by a registered representative from a mutual fund sponsor?
A
Trip to Bermuda
B
$50 gift certificate
C
$500 cash
D
$500 towards the purchase of fund shares
B
$50 gift certificate
Fidelity bonds are maintained by brokerage firms to:
A
protect against loss due to employee theft
B
protect against loss against falling markets
C
insure against casualty losses
D
meet minimum Net Capital standards
A
protect against loss due to employee theft
If a customer wishes to find out about a registered representative's disciplinary history, this information is:
A
sealed and cannot be given to customers
B
available from the Securities and Exchange Commission
C
available in the Federal Register
D
available from the Central Registration Depository on the BrokerCheck websi
D
available from the Central Registration Depository on the BrokerCheck websi
A registered representative reads in that morning's newspaper that "Asian securities markets appear to have finally bottomed out." Based on this information, the registered representative calls each of her customers and says "Now is the time to buy Asia Fund." This action by the registered representative is:
A
defined as a communication with the public and must be approved in advance by a compliance officer
B
is a prohibited practice, since this is churning
C
is a prohibited practice, since a suitability determination was not made for each client
D
is a prohibited practice, since the recommendation did not come from the member firm's research department
C
is a prohibited practice, since a suitability determination was not made for each client

Making the same recommendation to every customer is a prohibited practice. A recommendation can only be made based upon a suitability determination specific to that client.
A FINRA member firm's research department has prepared a report on ACME Corp. that changes the firm's recommendation from "Buy" to "Hold." Based on this information, a registered representative calls all of his customers and tells them that "This report will create an exceptional opportunity to buy this stock at a more favorable price. I recommend you increase the size of your holdings." This action:
A
requires the prior approval of the branch manager
B
requires the prior approval of FINRA
C
misrepresents the findings of the firm's research report
D
is consistent with the findings of the firm's research report
C
misrepresents the findings of the firm's research report
A registered representative makes the following recommendation to her customer: "In case of an emergency requiring immediate cash, you may not be able to sell your securities and get a check the same day. I recommend that you send $10,000 of cash to me at my office where I will place it in safekeeping. If you have an emergency cash need, I can bring the cash to you immediately." This action is:
A
permitted, since it better serves the client
B
permitted only if the registered representative has worked in the business for at least 10 years
C
permitted only if the registered representative is also a registered investment adviser representative
D
prohibited under FINRA rules
D
prohibited under FINRA rules
Under FINRA rules, a registered representative:
A
may borrow money from a customer only with the permission of FINRA
B
may borrow money from a customer only with the permission of the branch manager
C
may borrow money from a customer only with the permission of the customer
D
may not borrow money from a customer
D
may not borrow money from a customer
A registered representative explains to each of his customers that "Day trading of stock index options to profit from intra-day market swings is a safe and highly profitable strategy." This statement is:
A
truthful
B
only permitted for those customers who have previously signed an options agreement
C
only permitted for those customers who effected at least 10 options trades in the past year
D
unethical
D
unethical
Upon receipt of a large customer order to buy a stock that is likely to have positive market impact, a registered representative first places an order to buy that stock for his or her personal account. This is:

I a permitted practice
II a prohibited practice
III known as front running
IV known as shadowing
II and III
Which of the following actions by a registered representative are prohibited under FINRA rules?

I Spreading rumors of a sensational character that might be expected to influence prices on the exchange
II Lending money to a customer where investment securities will be the collateral for the loan
III Sharing in the gain or loss of a customer account
IV Guaranteeing the performance of an investment
ALL THE ABOVE
A customer, who has previously signed an arbitration agreement, has a dispute with a member firm. Under FINRA rules, this will be handled by:
A
litigation
B
mediation
C
arbitration
D
negotiation
C
arbitration
When comparing arbitration to litigation for settling disputes with brokerage firms, which of the following statements are true?

I Arbitration is more time efficient
II Arbitration is less time efficient
III Arbitration is more cost efficient
IV Arbitration is less cost efficient
I and III
Which of the following individuals are permitted to be included in arbitration panels?
I Persons affiliated with member firms
II Disinterested persons with no industry affiliation
III Attorneys that are members of the bar
I, II, III

Arbitration panels consist of individuals affiliated with member firms and representatives from the general public. Attorneys are also permitted on arbitration panels (a nice source of income for attorneys who are retired).
All of the following persons can be on securities industry arbitration panels EXCEPT:
A
disinterested persons who are affiliated with member firms
B
interested persons who are affiliated with member firms
C
members of the general public
D
attorneys who are members of the bar
B
interested persons who are affiliated with member firms
If mediation is chosen instead of arbitration to settle a dispute, all of the following statements are true EXCEPT:
A
either party can reject the mediator's decision
B
both parties must have agreed to the use of mediation
C
the decision of the mediator is binding and cannot be appealed
D
the use of mediation is an alternative to the FINRA arbitration procedure
C
the decision of the mediator is binding and cannot be appealed
A decision is reached by the Hearing Panel under the Code of Procedure. Which statement is TRUE?
A
The decision is binding and non-appealable
B
An appeal may be filed with the National Adjudicatory Council
C
An appeal may be filed with the SEC
D
An appeal may be filed in Federal Court
B
An appeal may be filed with the National Adjudicatory Council
Sets found in the same folder