Final Study Guide Series 24 Questions with Correct
Answers
BDs may enter into a temporary subordination agreement. However, the
broker-dealer is limited to no more than 3 such agreements in any 12-
month period. Correct Answer-The duration of a temporary
subordination agreement may not exceed 45 days.
If a customer wishes to open an account as a guardian, the member firm
would need:
- A copy of the court appointment.
- Guardian accounts are not necessarily limited to children, so UGMA
documentation is not always a requirement. Correct Answer-If a
customer wishes to open an account as a guardian, the member firm
would need:
- A copy of the court appointment.
- Guardian accounts are not necessarily limited to children, so UGMA
documentation is not always a requirement.
An equity IPO may not be purchased by restricted persons, including:
1. FINRA member firms and any associated person.
,2. An immediate family member of an employee of a member firm.
3. Finders and fiduciaries and portfolio managers who are buying for
their own account. Correct Answer-An exception is granted that allows a
restricted person to purchase an equity IPO if an immediate family
member is a director or employee of the issuer.
This is known as an issuer-directed sale.
S.E.C. Rule 147 covers an exemption from registration for the sale of
securities on an intrastate basis.
A purchaser of stock under Rule 147 is not allowed to sell the securities
to a non-resident of the state for a period of 6 months following the last
date of sale by the issuer. Correct Answer-S.E.C. Rule 147 covers an
exemption from registration for the sale of securities on an intrastate
basis.
A purchaser of stock under Rule 147 is not allowed to sell the securities
to a non-resident of the state for a period of 6 months following the last
date of sale by the issuer.
Under Regulation SHO, if a BD has a fail to deliver position at a
clearing firm in a *threshold security* for a continuous period of *13
settlement days*, the BD must close out the fail to deliver immediately
by purchasing securities of a like kind and quantity. Correct Answer-The
,close-out must take place no later than the start of the trading day after
the 13th settlement day, the morning of the 14th day.
A broker-dealer may accept a customer order subject to the terms and
conditions negotiated with the client, including the condition that the
firm may trade ahead of the order. Correct Answer-Although the firm is
not bound by Manning obligations, it does not have carte blanche to
trade ahead of the customer.
The firm must still consider its best-execution obligation to its customer
when deciding whether to execute an order for its own account or to fill
a customer order.
Rule 147 deals with an exemption from registration with the SEC for
intrastate offerings.
One of the conditions is that *100% of the sales be made to residents of
the state* where the issuer is organized. Correct Answer-A corporation
must have its principal office in that state to be considered a resident of
that state.
Where the company does business is not a factor.
A member firm that is registered as a market maker in a specific security
must have its own two-sided firm quote.
, This is known as its Primary M.P.I.D. Correct Answer-Supplemental
M.P.I.D. quotes may be one-sided and are not subject to unexcused
withdrawal penalties. Trades should be reported using the same MPID as
the quote.
Supplemental M.P.I.D.s may not be used for passive market makers or
stabilizing bids.
FINRA allows market participants to display quotes and report
transactions using multiple Market Participant Identifiers. Correct
Answer-Firms must receive FINRA approval to use other identifications
in addition to their primary market participant symbol.
A broker-dealer that carries margin accounts is required to file a
*monthly report*.
This report would contain the total debit balances in its securities margin
accounts, and the total free credit balances in its cash and margin
accounts. Correct Answer-Short positions in equity securities must be
filed *twice a month*, and a broker-dealer that uses the alternative
method to calculate its net capital must file supplemental reports as
prescribed by FINRA.
The filmed version of a television or video advertisement must be filed
with an SRO within 10 business days of first use or broadcast.
Answers
BDs may enter into a temporary subordination agreement. However, the
broker-dealer is limited to no more than 3 such agreements in any 12-
month period. Correct Answer-The duration of a temporary
subordination agreement may not exceed 45 days.
If a customer wishes to open an account as a guardian, the member firm
would need:
- A copy of the court appointment.
- Guardian accounts are not necessarily limited to children, so UGMA
documentation is not always a requirement. Correct Answer-If a
customer wishes to open an account as a guardian, the member firm
would need:
- A copy of the court appointment.
- Guardian accounts are not necessarily limited to children, so UGMA
documentation is not always a requirement.
An equity IPO may not be purchased by restricted persons, including:
1. FINRA member firms and any associated person.
,2. An immediate family member of an employee of a member firm.
3. Finders and fiduciaries and portfolio managers who are buying for
their own account. Correct Answer-An exception is granted that allows a
restricted person to purchase an equity IPO if an immediate family
member is a director or employee of the issuer.
This is known as an issuer-directed sale.
S.E.C. Rule 147 covers an exemption from registration for the sale of
securities on an intrastate basis.
A purchaser of stock under Rule 147 is not allowed to sell the securities
to a non-resident of the state for a period of 6 months following the last
date of sale by the issuer. Correct Answer-S.E.C. Rule 147 covers an
exemption from registration for the sale of securities on an intrastate
basis.
A purchaser of stock under Rule 147 is not allowed to sell the securities
to a non-resident of the state for a period of 6 months following the last
date of sale by the issuer.
Under Regulation SHO, if a BD has a fail to deliver position at a
clearing firm in a *threshold security* for a continuous period of *13
settlement days*, the BD must close out the fail to deliver immediately
by purchasing securities of a like kind and quantity. Correct Answer-The
,close-out must take place no later than the start of the trading day after
the 13th settlement day, the morning of the 14th day.
A broker-dealer may accept a customer order subject to the terms and
conditions negotiated with the client, including the condition that the
firm may trade ahead of the order. Correct Answer-Although the firm is
not bound by Manning obligations, it does not have carte blanche to
trade ahead of the customer.
The firm must still consider its best-execution obligation to its customer
when deciding whether to execute an order for its own account or to fill
a customer order.
Rule 147 deals with an exemption from registration with the SEC for
intrastate offerings.
One of the conditions is that *100% of the sales be made to residents of
the state* where the issuer is organized. Correct Answer-A corporation
must have its principal office in that state to be considered a resident of
that state.
Where the company does business is not a factor.
A member firm that is registered as a market maker in a specific security
must have its own two-sided firm quote.
, This is known as its Primary M.P.I.D. Correct Answer-Supplemental
M.P.I.D. quotes may be one-sided and are not subject to unexcused
withdrawal penalties. Trades should be reported using the same MPID as
the quote.
Supplemental M.P.I.D.s may not be used for passive market makers or
stabilizing bids.
FINRA allows market participants to display quotes and report
transactions using multiple Market Participant Identifiers. Correct
Answer-Firms must receive FINRA approval to use other identifications
in addition to their primary market participant symbol.
A broker-dealer that carries margin accounts is required to file a
*monthly report*.
This report would contain the total debit balances in its securities margin
accounts, and the total free credit balances in its cash and margin
accounts. Correct Answer-Short positions in equity securities must be
filed *twice a month*, and a broker-dealer that uses the alternative
method to calculate its net capital must file supplemental reports as
prescribed by FINRA.
The filmed version of a television or video advertisement must be filed
with an SRO within 10 business days of first use or broadcast.
