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.
- within 30 day period, department shall serve written notice on applicant and refund application fee less
$500 and FINRA shall retain as a processing fee.
- if applicant continues to apply, applicant shall submit a new application and fee pursuant to schedule A.
Office of supervisory jurisdiction is a term that refers to any office of a member at which one or more of
the following functions take place: (7) - correct answer ✔✔- order execution/market making
- structuring of public offerings or private placements
- maintaining custody of customer funds and or securities
- approval of (NOT THE OPENING OF) new accounts on behalf of member
- review and endorsement of customer orders
- final approval of retail communications for use by persons associated with the member
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.
- within 30 day period, department shall serve written notice on applicant and refund application fee less
$500 and FINRA shall retain as a processing fee.
- if applicant continues to apply, applicant shall submit a new application and fee pursuant to schedule A.
Office of supervisory jurisdiction is a term that refers to any office of a member at which one or more of
the following functions take place: (7) - correct answer ✔✔- order execution/market making
- structuring of public offerings or private placements
- maintaining custody of customer funds and or securities
- approval of (NOT THE OPENING OF) new accounts on behalf of member
- review and endorsement of customer orders
- final approval of retail communications for use by persons associated with the member
