Under FINRA rules, disputes between a registered representative and a brokerage
firm are handled by:
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binding arbitration and are non-appealable
Disputes between registered representatives and brokerage firms are
handled by binding (non-appealable) arbitration.
,A registered representative at a FINRA member firm has been elected to his
cooperative apartment building's Board of Directors. Which statement is TRUE?
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This event must be reported to his or her employer
Any "OBA" - Outside Business Activity - must be reported to the firm and
must be approved by the firm. Furthermore, it must be reported on that
registered representative's U4 Form and is disclosed in that individual's
BrokerCheck report.
Remember that an individual does not have to be paid for an OBA to exist.
If the representative is in the position to steer investment activities of the
outside business entity - that makes it an OBA. The fact that the registered
representative, on the Board of Directors of the cooperative apartment
house, would be in a position to steer the investment activities of the coop's
operating and reserve funds - makes this an OBA.
Under FINRA arbitration rules, the arbitration panel for a dispute involving a customer
will consist of individuals:
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working both inside and outside the securities industry
In a dispute involving customers, arbitration panels consist of 3 arbitrators -
2 public and 1 non-public. A non-public arbitrator is someone who
currently works in the securities industry or is retired from the securities
industry. Also note that the customer has the option of choosing a panel
that consists of 3 public arbitrators.
,All of the following would have to be reviewed by a principal EXCEPT:
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Form letters for internal use within a firm
FINRA defines communications with the public as either:
Correspondence: A communication made available to 25 or fewer existing
or prospective retail clients
Retail Communication: A communication made available to more than 25
existing or prospective retail clients
Retail communications must be approved by a principal prior to use and
can be required to be filed with FINRA. In contrast, correspondence is only
subject to "post use review and approval" (as long as the firm has
appropriate supervisory procedures in place) and cannot be required to
be filed with FINRA.
A "Retail Communication" is a very broad definition that includes advertising
(seen by the general public) and sales literature (seen by a specific
audience).
Advertising: TV, radio, newsprint, billboards, websites, internet bulletin
boards
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
Internal documents of a brokerage firm do not have to be reviewed by a
manager or principal. Because the public does not see these, FINRA is not
concerned with their content.
All customer complaint letters must also be reviewed and handled by a
principal.
Which decision by a registered representative requires specific customer
authorization?
, Give this one a try later!
Determining the number of shares purchased in a margin account
Generally, a written power of attorney is required only if a registered
representative chooses more than price and/or time of execution in a
customer transaction. (The firm/rep may however choose the trading venue
without a POA) Thus, if the registered representative chooses the security
to be traded or the size of the trade, a discretionary power of attorney is
required. It makes no difference if the transaction is effected in either a
cash account or a margin account.
The FINRA 5% Policy requires that consideration be given to all of the following when
determining mark-ups and commissions EXCEPT:
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financial condition of customer
A customer's ability to pay has no bearing on the amount of commission or
mark-up that is charged. The dollar amount of the transaction, level of
service provided by the firm, and the type of security involved are all
considerations under the 5% Policy when determining a fair and reasonable
commission or mark-up.
A customer buys securities without making payment and then sells the same securities
without showing the intent to settle the transaction. This is:
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Free Riding
If a customer buys securities and then sells the same securities without the
intent to pay for the purchase, he is taking a "free ride" on the brokerage
firm are handled by:
Give this one a try later!
binding arbitration and are non-appealable
Disputes between registered representatives and brokerage firms are
handled by binding (non-appealable) arbitration.
,A registered representative at a FINRA member firm has been elected to his
cooperative apartment building's Board of Directors. Which statement is TRUE?
Give this one a try later!
This event must be reported to his or her employer
Any "OBA" - Outside Business Activity - must be reported to the firm and
must be approved by the firm. Furthermore, it must be reported on that
registered representative's U4 Form and is disclosed in that individual's
BrokerCheck report.
Remember that an individual does not have to be paid for an OBA to exist.
If the representative is in the position to steer investment activities of the
outside business entity - that makes it an OBA. The fact that the registered
representative, on the Board of Directors of the cooperative apartment
house, would be in a position to steer the investment activities of the coop's
operating and reserve funds - makes this an OBA.
Under FINRA arbitration rules, the arbitration panel for a dispute involving a customer
will consist of individuals:
Give this one a try later!
working both inside and outside the securities industry
In a dispute involving customers, arbitration panels consist of 3 arbitrators -
2 public and 1 non-public. A non-public arbitrator is someone who
currently works in the securities industry or is retired from the securities
industry. Also note that the customer has the option of choosing a panel
that consists of 3 public arbitrators.
,All of the following would have to be reviewed by a principal EXCEPT:
Give this one a try later!
Form letters for internal use within a firm
FINRA defines communications with the public as either:
Correspondence: A communication made available to 25 or fewer existing
or prospective retail clients
Retail Communication: A communication made available to more than 25
existing or prospective retail clients
Retail communications must be approved by a principal prior to use and
can be required to be filed with FINRA. In contrast, correspondence is only
subject to "post use review and approval" (as long as the firm has
appropriate supervisory procedures in place) and cannot be required to
be filed with FINRA.
A "Retail Communication" is a very broad definition that includes advertising
(seen by the general public) and sales literature (seen by a specific
audience).
Advertising: TV, radio, newsprint, billboards, websites, internet bulletin
boards
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
Internal documents of a brokerage firm do not have to be reviewed by a
manager or principal. Because the public does not see these, FINRA is not
concerned with their content.
All customer complaint letters must also be reviewed and handled by a
principal.
Which decision by a registered representative requires specific customer
authorization?
, Give this one a try later!
Determining the number of shares purchased in a margin account
Generally, a written power of attorney is required only if a registered
representative chooses more than price and/or time of execution in a
customer transaction. (The firm/rep may however choose the trading venue
without a POA) Thus, if the registered representative chooses the security
to be traded or the size of the trade, a discretionary power of attorney is
required. It makes no difference if the transaction is effected in either a
cash account or a margin account.
The FINRA 5% Policy requires that consideration be given to all of the following when
determining mark-ups and commissions EXCEPT:
Give this one a try later!
financial condition of customer
A customer's ability to pay has no bearing on the amount of commission or
mark-up that is charged. The dollar amount of the transaction, level of
service provided by the firm, and the type of security involved are all
considerations under the 5% Policy when determining a fair and reasonable
commission or mark-up.
A customer buys securities without making payment and then sells the same securities
without showing the intent to settle the transaction. This is:
Give this one a try later!
Free Riding
If a customer buys securities and then sells the same securities without the
intent to pay for the purchase, he is taking a "free ride" on the brokerage
