Series 24 Chapter 4
SRO's (6) - correct answer ✔- FINRA, along with the CBOE and the MSRB
are Self Regulatory Organizations.
- an SRO Is supported by its own members
- an SRO sets rules, regulations, and penalties
- an SRO allows its members to vote
- SROs are NOT govt agencies
- all disciplinary actions taken by SROs are subject to SEC review.
Each new applicant for membership as a firm must have what when it comes
to principals and other key concepts? (4) - correct answer ✔- at least 2
registered principals
- one financial and operations principal unless an exemption is granted
- does not include sole proprietorships
- once received, FINRA will review the application within 180 days of
submission
Successor registration rules (3) - correct answer ✔- in the event that a broker
or dealer is continuing the business of a broker or dealer, the registration of
the original BD remains effective as the registration of the successor if the
successor within 30 DAYS files application for registration on form BD
- predecessor also must file a notice of withdrawal from registration on form
BDW.
- registration of the original broker or dealer will cease to be effective as
registration 45 days after application on form BD is filed by successor
The SEC or an authorized registered securities association or national
securities exchange where broker or dealer is a member, shall conduct an
, inspection of the BD to determine what, and within how long? (3) - correct
answer ✔- to determine whether it is operating in conformity with the
provisions of the rules and regulations.
- done within 6 months of the date of granting of registration.
- SEC may delay inspection for a period not to exceed 6 months
Application for approval of change in ownership, control, or business
operations is required for a broker dealer. What 5 situations would require
application? - correct answer ✔- merger of member with another member
- direct or indirect acquisition by member of another member
- direct or indirect acquisition or transfer of 25% or more in aggregate of
members assets, business, or line of operation that generates over 25% of
members earnings over a rolling 36 month basis.
- change in equity ownership or partnership capital of member that results in
one person or entity owning or controlling 25% or more of equity or
partnership capital
- material change in business operations.
Filing / content of the application for approval of change by a broker dealer:
(2) - correct answer ✔- member shall file the application with FINRA's
department of member regulation
- applicant shall submit an application that includes a form CMA, including a
detailed description of change in ownership, control, or business operations.
A member shall file an application for approval of a change in ownership or
control at least how long before the change? - correct answer ✔- 30 days.
Rejection of application that is not substantially complete - correct answer ✔-
if department determines within 30 days that the application is not
substantially complete, the department shall reject the application and deem it
not to have been filed.
SRO's (6) - correct answer ✔- FINRA, along with the CBOE and the MSRB
are Self Regulatory Organizations.
- an SRO Is supported by its own members
- an SRO sets rules, regulations, and penalties
- an SRO allows its members to vote
- SROs are NOT govt agencies
- all disciplinary actions taken by SROs are subject to SEC review.
Each new applicant for membership as a firm must have what when it comes
to principals and other key concepts? (4) - correct answer ✔- at least 2
registered principals
- one financial and operations principal unless an exemption is granted
- does not include sole proprietorships
- once received, FINRA will review the application within 180 days of
submission
Successor registration rules (3) - correct answer ✔- in the event that a broker
or dealer is continuing the business of a broker or dealer, the registration of
the original BD remains effective as the registration of the successor if the
successor within 30 DAYS files application for registration on form BD
- predecessor also must file a notice of withdrawal from registration on form
BDW.
- registration of the original broker or dealer will cease to be effective as
registration 45 days after application on form BD is filed by successor
The SEC or an authorized registered securities association or national
securities exchange where broker or dealer is a member, shall conduct an
, inspection of the BD to determine what, and within how long? (3) - correct
answer ✔- to determine whether it is operating in conformity with the
provisions of the rules and regulations.
- done within 6 months of the date of granting of registration.
- SEC may delay inspection for a period not to exceed 6 months
Application for approval of change in ownership, control, or business
operations is required for a broker dealer. What 5 situations would require
application? - correct answer ✔- merger of member with another member
- direct or indirect acquisition by member of another member
- direct or indirect acquisition or transfer of 25% or more in aggregate of
members assets, business, or line of operation that generates over 25% of
members earnings over a rolling 36 month basis.
- change in equity ownership or partnership capital of member that results in
one person or entity owning or controlling 25% or more of equity or
partnership capital
- material change in business operations.
Filing / content of the application for approval of change by a broker dealer:
(2) - correct answer ✔- member shall file the application with FINRA's
department of member regulation
- applicant shall submit an application that includes a form CMA, including a
detailed description of change in ownership, control, or business operations.
A member shall file an application for approval of a change in ownership or
control at least how long before the change? - correct answer ✔- 30 days.
Rejection of application that is not substantially complete - correct answer ✔-
if department determines within 30 days that the application is not
substantially complete, the department shall reject the application and deem it
not to have been filed.
