Series 24 - Full book Flashcards
Who authorizes FINRA? Who does FINRA operate under the oversight of? - correct answer ✔✔US
Congress; Securities and Exchange Commission (SEC)
New membership application (Form NMA) and Form BD are filed through - correct answer ✔✔FINRA
Gateway
What is Form BD used for? How soon must amendments be made (not big deal e.g., address, ownership,
branch openings)? How soon must you update Form BD if it becomes inaccurate/incomplete (big deal
e.g., violated federal sec's law, suspended/expelled by another SRO, subject to customer complaint
alleging theft)? - correct answer ✔✔To register with SEC, SROs, and states through Central Registration
Depository (CRD) system operated by FINRA; Amendments must be made within 30 days; Must promptly
(no later than 30 days) update Form BD
If firm has change in ownership, control, business ops, it must electronically submit a ____. When does
this need to be filed? - correct answer ✔✔Continuing Membership Application (CMA) ; at least 30 days
prior to any material change in its ownership or lines of business (e.g., merger, acquisition, change in
equity ownership that results in one person/entity controlling 25%+ of firm's equity)
Fictional Name or Doing Business As (DBA) designation is permitted if - correct answer ✔✔the name is
filed with FINRA and the SEC on form BD and is the name used to designate the member
Firms that transact business in nonexempt sec's must register with - correct answer ✔✔FINRA & SEC
All applicants must have X officers registered and qualified as appropriate principals for a general
securities firm. - correct answer ✔✔2 series 24-qualified people (If business is solely investmentn
company products, 2 Series 26-qualified people)
The Department of Member Regulation (DMR) issues a decision on the application within 30 days.
Decisions could be: - correct answer ✔✔grant the application, grant application with restrictions, deny
application
,How often will a member firm be risk assessed to demonstrate continued compliance with all applicable
laws and rules? - correct answer ✔✔every year
Securities Exchange Act Rule 17d-2 - correct answer ✔✔permits an exchange such as CBOE to agree with
another SRO such as FINRA to examine its member firms concerning, for example, CAT compliance or
financial accountability rules (to avoid duplicative examinations)
Form BR (Uniform Branch Office Registration Form) - correct answer ✔✔Used for branch office
registration; FINRA must be notified within 30 days of opening a new branch (thru Form BR); If a
member firm decides to close a branch, they use the exact same Form BR; If your firm adds a branch
office, it MAY be considered a material change which would require filing a CMA
Form BDW - correct answer ✔✔Filed when the entire firm chooses to cease doing business and/or
withdraw registration from SEC/FINRA/the states; before filing BDW, firm is obligated to update Form BD
for any inaccurate information
What happens if a firm is suspended/during and after suspended period? - correct answer ✔✔During
suspension, member firm is treated like nonmember; after suspension is over, member is automatically
reinstated to full membership
What happens if firm resigns? - correct answer ✔✔Firm is considered nonmember from the date of
acceptance by FINRA
Firms must electronically file statistical/summary information concerning customer complaints and
certain criminal/civil actions with FINRA by the - correct answer ✔✔15th day of the month following the
calendar quarter in which the member receives customer complaints
Members' annual fee to FINRA is based on what 2 things? - correct answer ✔✔# of branch offices & # of
registered reps (representatives/principals)
If a member fails to pay fees/assessments (including arbitration award) on timely basis, its membership
can be revoked or suspended upon X days of service of the notice from FINRA. - correct answer ✔✔15
Fidelity bond requirements for firms?
,How often must member firms review/purchase a new fidelity bond insurance policy?
What happens if fidelity bond is terminated, canceled, or materially modified? - correct answer
✔✔Firms with NC less than $250,000, maintain coverage of 120% or 100,000, whichever is GREATER
Firms with NC more than $250,000, look to Fidelity Bonding Coverage Table
In determining requirement, use HIGHEST NC requirement over the 12 months preceding computation
Every year on anniversary of policy
If terminated, canceled, modified, must immediately advise FINRA in writing.
BDs should be registered with - correct answer ✔✔SEC, Designated examining authority (DEA) such as
FINRA, and States
U4 does not ask about - correct answer ✔✔marital status or education
Pre-dispute Arbitration Clause - correct answer ✔✔FINRA rules require all registered representatives to
sign a pre-dispute arbitration agreement as part of their Form U4. This clause requires any future dispute
between the firm and rep, for example a financial disagreement, to be settled through an arbitration
proceeding rather than the court. An exception is that any disputes regarding harassment or
discrimination will only go to arbitration if both the firm and employee agree; otherwise, they will go to
the court.
Updates to U4 need to be made - correct answer ✔✔within 30 days
If an associate is disqualified b/c of a felony that does NOT involve a statutory disqualification, the
associate/firm may apply for relief from disqualification. When must they do this? - correct answer
✔✔Within 10 business days of notification
If an associate commits a statutory disqualifying offense, the Form U4 must be amended/submitted
when? - correct answer ✔✔Within 10 days of learning it.
, U4 previous work experience - correct answer ✔✔Include past 10 years; BD must verify last 3 years
Form U5 - correct answer ✔✔When a registered representative resigns or is terminated from
employment with a member firm, the firm is required to notify FINRA within 30 days by filing Form U5
with the applicable details.
If representative is no longer registered, he continues to be subject to the jurisdiction of regulators for at
least - correct answer ✔✔2 years after his registration is terminated
If a registered person leaves one member firm to join another, the new employer, in addition to filing
Form U4 must do what? - correct answer ✔✔Acquire copy of Form U5 filed by the former employer
within 60 days of U4 filing; Former EMPLOYER is not required to provide a copy of Form U5 to new
employing member firm. new firm must get copy from FINRA's CRD or its new employee. Employee must
provide within 2 business days of the request.
Employers must keep records of former employees for - correct answer ✔✔6 years
Maintaining qualifications program (MQP) - 2 conditions? - correct answer ✔✔Individuals would have to
be registered for at least 1 year prior to termination; Individuals could elect to participate when they
terminate a registration or within 2 years from the term. of registration
Members employing Tier 1 disqualified persons pay an annual fee of X. Members that employ Tier II
disqualified persons (felonies not related to sec's) pay Y. - correct answer ✔✔$1500; $1000
Foreign Associates - correct answer ✔✔Foreign associates, noncitizens who conduct business outside
the United States, must be registered with FINRA but are exempt from having to pass a qualification
exam.
Series 6 - correct answer ✔✔The investment company/variable contract products limited representative
license, which entitles the holder to sell mutual funds and variable annuities and is used by many firms
that sell primarily insurance-related products. The Series 6 can serve as the prerequisite for the Series 26
license. Holder can sell closed-end funds only as a new issue
Who authorizes FINRA? Who does FINRA operate under the oversight of? - correct answer ✔✔US
Congress; Securities and Exchange Commission (SEC)
New membership application (Form NMA) and Form BD are filed through - correct answer ✔✔FINRA
Gateway
What is Form BD used for? How soon must amendments be made (not big deal e.g., address, ownership,
branch openings)? How soon must you update Form BD if it becomes inaccurate/incomplete (big deal
e.g., violated federal sec's law, suspended/expelled by another SRO, subject to customer complaint
alleging theft)? - correct answer ✔✔To register with SEC, SROs, and states through Central Registration
Depository (CRD) system operated by FINRA; Amendments must be made within 30 days; Must promptly
(no later than 30 days) update Form BD
If firm has change in ownership, control, business ops, it must electronically submit a ____. When does
this need to be filed? - correct answer ✔✔Continuing Membership Application (CMA) ; at least 30 days
prior to any material change in its ownership or lines of business (e.g., merger, acquisition, change in
equity ownership that results in one person/entity controlling 25%+ of firm's equity)
Fictional Name or Doing Business As (DBA) designation is permitted if - correct answer ✔✔the name is
filed with FINRA and the SEC on form BD and is the name used to designate the member
Firms that transact business in nonexempt sec's must register with - correct answer ✔✔FINRA & SEC
All applicants must have X officers registered and qualified as appropriate principals for a general
securities firm. - correct answer ✔✔2 series 24-qualified people (If business is solely investmentn
company products, 2 Series 26-qualified people)
The Department of Member Regulation (DMR) issues a decision on the application within 30 days.
Decisions could be: - correct answer ✔✔grant the application, grant application with restrictions, deny
application
,How often will a member firm be risk assessed to demonstrate continued compliance with all applicable
laws and rules? - correct answer ✔✔every year
Securities Exchange Act Rule 17d-2 - correct answer ✔✔permits an exchange such as CBOE to agree with
another SRO such as FINRA to examine its member firms concerning, for example, CAT compliance or
financial accountability rules (to avoid duplicative examinations)
Form BR (Uniform Branch Office Registration Form) - correct answer ✔✔Used for branch office
registration; FINRA must be notified within 30 days of opening a new branch (thru Form BR); If a
member firm decides to close a branch, they use the exact same Form BR; If your firm adds a branch
office, it MAY be considered a material change which would require filing a CMA
Form BDW - correct answer ✔✔Filed when the entire firm chooses to cease doing business and/or
withdraw registration from SEC/FINRA/the states; before filing BDW, firm is obligated to update Form BD
for any inaccurate information
What happens if a firm is suspended/during and after suspended period? - correct answer ✔✔During
suspension, member firm is treated like nonmember; after suspension is over, member is automatically
reinstated to full membership
What happens if firm resigns? - correct answer ✔✔Firm is considered nonmember from the date of
acceptance by FINRA
Firms must electronically file statistical/summary information concerning customer complaints and
certain criminal/civil actions with FINRA by the - correct answer ✔✔15th day of the month following the
calendar quarter in which the member receives customer complaints
Members' annual fee to FINRA is based on what 2 things? - correct answer ✔✔# of branch offices & # of
registered reps (representatives/principals)
If a member fails to pay fees/assessments (including arbitration award) on timely basis, its membership
can be revoked or suspended upon X days of service of the notice from FINRA. - correct answer ✔✔15
Fidelity bond requirements for firms?
,How often must member firms review/purchase a new fidelity bond insurance policy?
What happens if fidelity bond is terminated, canceled, or materially modified? - correct answer
✔✔Firms with NC less than $250,000, maintain coverage of 120% or 100,000, whichever is GREATER
Firms with NC more than $250,000, look to Fidelity Bonding Coverage Table
In determining requirement, use HIGHEST NC requirement over the 12 months preceding computation
Every year on anniversary of policy
If terminated, canceled, modified, must immediately advise FINRA in writing.
BDs should be registered with - correct answer ✔✔SEC, Designated examining authority (DEA) such as
FINRA, and States
U4 does not ask about - correct answer ✔✔marital status or education
Pre-dispute Arbitration Clause - correct answer ✔✔FINRA rules require all registered representatives to
sign a pre-dispute arbitration agreement as part of their Form U4. This clause requires any future dispute
between the firm and rep, for example a financial disagreement, to be settled through an arbitration
proceeding rather than the court. An exception is that any disputes regarding harassment or
discrimination will only go to arbitration if both the firm and employee agree; otherwise, they will go to
the court.
Updates to U4 need to be made - correct answer ✔✔within 30 days
If an associate is disqualified b/c of a felony that does NOT involve a statutory disqualification, the
associate/firm may apply for relief from disqualification. When must they do this? - correct answer
✔✔Within 10 business days of notification
If an associate commits a statutory disqualifying offense, the Form U4 must be amended/submitted
when? - correct answer ✔✔Within 10 days of learning it.
, U4 previous work experience - correct answer ✔✔Include past 10 years; BD must verify last 3 years
Form U5 - correct answer ✔✔When a registered representative resigns or is terminated from
employment with a member firm, the firm is required to notify FINRA within 30 days by filing Form U5
with the applicable details.
If representative is no longer registered, he continues to be subject to the jurisdiction of regulators for at
least - correct answer ✔✔2 years after his registration is terminated
If a registered person leaves one member firm to join another, the new employer, in addition to filing
Form U4 must do what? - correct answer ✔✔Acquire copy of Form U5 filed by the former employer
within 60 days of U4 filing; Former EMPLOYER is not required to provide a copy of Form U5 to new
employing member firm. new firm must get copy from FINRA's CRD or its new employee. Employee must
provide within 2 business days of the request.
Employers must keep records of former employees for - correct answer ✔✔6 years
Maintaining qualifications program (MQP) - 2 conditions? - correct answer ✔✔Individuals would have to
be registered for at least 1 year prior to termination; Individuals could elect to participate when they
terminate a registration or within 2 years from the term. of registration
Members employing Tier 1 disqualified persons pay an annual fee of X. Members that employ Tier II
disqualified persons (felonies not related to sec's) pay Y. - correct answer ✔✔$1500; $1000
Foreign Associates - correct answer ✔✔Foreign associates, noncitizens who conduct business outside
the United States, must be registered with FINRA but are exempt from having to pass a qualification
exam.
Series 6 - correct answer ✔✔The investment company/variable contract products limited representative
license, which entitles the holder to sell mutual funds and variable annuities and is used by many firms
that sell primarily insurance-related products. The Series 6 can serve as the prerequisite for the Series 26
license. Holder can sell closed-end funds only as a new issue
