FINRA Rules Exam Questions with
Complete Solutions20
What securities markets does FINRA regulate and which ones does it not? - ANSWERS-FINRA
regulates- Primary market, First Market, Second Market, Third Market, Fourth Market
FINRA does not regulate the CBOE options trading floor
who must be registered at a broker dealer - ANSWERS-all operating officers
all sales persons
all traders
back office personnel who prepare customer confirmations or customer account statements
all other clerical personnel are not required to
information that must be disclosed in the Form U4 by applicant for registration in the securities
industry includes - ANSWERS-Applicant's Name and Address;
Broker-Dealer Name and Address;
Name and Address of "Old" Broker-Dealer if the registrant is transferring from another firm;
5 Year Consecutive Residence History;
10 Year Consecutive Employment History;
Any Other Businesses In Which The Registrant Is Currently Engaged;
Any Other Names By Which The Registrant Is Known;
Disclosure By The Applicant Of Any Arrest, Conviction, Charge, involving investments, fraud,
bribery, forgery, etc.;
,Disclosure By The Applicant of Any Felony Charge or Conviction; and Any Misdemeanor Charge
or Conviction Involving Money, Securities, Theft, Perjury, etc.
how many RR be compensated - ANSWERS-only by the brokerage firm they work at based on
trading commissions, salary, or asset based fees
NOT from customers
who must be notified if a RR takes a second job - ANSWERS-the employing member firm must
be notified in writing
no requirement to notify or get FINRA approval
what constitutes an Outside Business Activity - ANSWERS-(reported on U4)
being compensated or if a RR assumes a "control" position in a not-for-profit entity
FINRA gift limit related to one's employment in the securities business is - ANSWERS-$100 per
person per year
either given or received
what is FINRA's rule with borrowing money - ANSWERS-FINRA prohibits RRs from borrowing
money personally from a customer or from lending money personally to a customer
UNLESS
customer is immediate family member, significant other, or a bank making a loan like it would to
anyone else
, what if a RR accepted a non-cash compensation from someone other than their employer
exceeding $100 - ANSWERS-this is prohibited
EXCEPTION-- sponsor held educational seminars
does business entertainment fall under the $100 gift limit - ANSWERS-no! as long as it is not too
excessive or too frequent and it must comply with the firm's policies
business entertainment is that the representative and the customer are together at some type
of event
can RR share commissions with other RRs? - ANSWERS-yes as long as they both work at the
same broker dealer
Firm's continuing education program vs Regulatory Element continuing education program -
ANSWERS-each year, every member firm must deliver a continuing education program to each
RR that covers releveant compliance issues, regulatory issues, and product feautures and issues;
this must be documented
on each RR's second year anniversary of registration (licensing) and every three years thereafter,
a Regulatory Element Continuing education program must be completed through PROCTOR;
must be completed within 120 days of notification and if not, license may be suspended
what happens if a licensing person leaves the industry - ANSWERS-all licenses lapse after two
years; if they enter back into the industry after two years, they must retake the licensing exams
a member firm cannot hold a RR license during a period where they are not employed at a firm
(this is called parking a license)
when must FINRA be notified - ANSWERS-has violated the Securities Acts;
Complete Solutions20
What securities markets does FINRA regulate and which ones does it not? - ANSWERS-FINRA
regulates- Primary market, First Market, Second Market, Third Market, Fourth Market
FINRA does not regulate the CBOE options trading floor
who must be registered at a broker dealer - ANSWERS-all operating officers
all sales persons
all traders
back office personnel who prepare customer confirmations or customer account statements
all other clerical personnel are not required to
information that must be disclosed in the Form U4 by applicant for registration in the securities
industry includes - ANSWERS-Applicant's Name and Address;
Broker-Dealer Name and Address;
Name and Address of "Old" Broker-Dealer if the registrant is transferring from another firm;
5 Year Consecutive Residence History;
10 Year Consecutive Employment History;
Any Other Businesses In Which The Registrant Is Currently Engaged;
Any Other Names By Which The Registrant Is Known;
Disclosure By The Applicant Of Any Arrest, Conviction, Charge, involving investments, fraud,
bribery, forgery, etc.;
,Disclosure By The Applicant of Any Felony Charge or Conviction; and Any Misdemeanor Charge
or Conviction Involving Money, Securities, Theft, Perjury, etc.
how many RR be compensated - ANSWERS-only by the brokerage firm they work at based on
trading commissions, salary, or asset based fees
NOT from customers
who must be notified if a RR takes a second job - ANSWERS-the employing member firm must
be notified in writing
no requirement to notify or get FINRA approval
what constitutes an Outside Business Activity - ANSWERS-(reported on U4)
being compensated or if a RR assumes a "control" position in a not-for-profit entity
FINRA gift limit related to one's employment in the securities business is - ANSWERS-$100 per
person per year
either given or received
what is FINRA's rule with borrowing money - ANSWERS-FINRA prohibits RRs from borrowing
money personally from a customer or from lending money personally to a customer
UNLESS
customer is immediate family member, significant other, or a bank making a loan like it would to
anyone else
, what if a RR accepted a non-cash compensation from someone other than their employer
exceeding $100 - ANSWERS-this is prohibited
EXCEPTION-- sponsor held educational seminars
does business entertainment fall under the $100 gift limit - ANSWERS-no! as long as it is not too
excessive or too frequent and it must comply with the firm's policies
business entertainment is that the representative and the customer are together at some type
of event
can RR share commissions with other RRs? - ANSWERS-yes as long as they both work at the
same broker dealer
Firm's continuing education program vs Regulatory Element continuing education program -
ANSWERS-each year, every member firm must deliver a continuing education program to each
RR that covers releveant compliance issues, regulatory issues, and product feautures and issues;
this must be documented
on each RR's second year anniversary of registration (licensing) and every three years thereafter,
a Regulatory Element Continuing education program must be completed through PROCTOR;
must be completed within 120 days of notification and if not, license may be suspended
what happens if a licensing person leaves the industry - ANSWERS-all licenses lapse after two
years; if they enter back into the industry after two years, they must retake the licensing exams
a member firm cannot hold a RR license during a period where they are not employed at a firm
(this is called parking a license)
when must FINRA be notified - ANSWERS-has violated the Securities Acts;
