Series 7 Regulations Exam 2025
Questions and Answers
Securities and Exchange Commission (SEC) - ANSWER✔✔->responsible for
supervision of the capital markets
>writes laws that govern the financial markets
>Has the ability to enforce those laws, even if the broker/dealer or associated person is
registered with a self-regulatory authority (SRO).
>Governs publicly traded companies as well as industry professionals
>The Commission can revoke the registration of a broker/dealer, but it has few
punitive powers
>SEC refers criminal cases to the judicial system
>SEC regulates the SROs and supervises their enforcement responsibilities in both the
OTC and exchange secondary markets
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,>President of the United States appoints SEC board members for terms of 5 years, with
advice and consent of the U.S. Senate
Securities Exchange Act of 1934 - ANSWER✔✔-*Established to regulate the trading of
securities after they have been issued* (secondary market) *and to regulate exchanges
and broker/ dealers*
>When the National Association of Securities Dealers (Now FINRA) was formed, the
SEC received the authority to review FINRA disciplinary actions, disapprove rulings
and suspend or revoke registration for failure to comply with its rules
Financial Industry Regulatory Authority (FINRA) - ANSWER✔✔-(Formerly National
Association of Securities Dealers
>The rules and regulations of FINRA are referred to as bylaws, they fall into 4 Main
categories:
*Uniform Practice Code (UPC)*
*Conduct Rules*
*Code of Procedure*
*Code of Arbitration*
>There are also rules establishing the qualifications and registration requirements of
members... *Any broker/dealer who is authorized to transact securities business in the
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,United States is eligible for FINRA membership, except those who have been
suspended or barred from membership due to securities violations*
Uniform Practice Code (UPC) - ANSWER✔✔->relates to dealings between member
firms, covering all transactions in nonexempt securities while providing orderly
completion of dealer-to-dealer transactions
>addresses how broker/dealers interact with each other and with associated persons.
>These rules establish standard industry practice for procedures such as regular way
trade settlement, confirmation delivery, filing of forms such as U4s, U5s, and Form BDs
Conduct Rules - ANSWER✔✔-relate to a member firm's dealings with the public
Code of Procedure - ANSWER✔✔-*Outlines the procedural process in the event of
violations and complaints*
> it is the section of FINRA By-Laws that concerns the handling of securities violations
and complaints
> A customer with a complaint against a member firm or its personnel may submit a
written compliant to any *Department of Enforcement (DOE)*, The *Board of
Governors* may also file a complaint with the DOE
> DOE has the initial jurisdiction for handling complaints
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, Code of Arbitration - ANSWER✔✔-*The purpose of arbitration is to settle inter-
industry disputes* (Ex: One member firm against another, or against a bank, or a
transfer agent)
> It is the section of FINRA By-Laws that is concerned with settling disputes between
dealers and brokers
> Arbitration provides a *cost-effective* method through which disputes are typically
*settled much sooner* than they would be if pursued through the courts
By-Laws define a registered broker/dealer as - ANSWER✔✔-a firm who is registered
with the Commission under the Act of '34. It further defines an associated person as
*>An individual registered under the rules of FINRA*
*>An individual who is directly or indirectly controlled by a member firm, regardless if
the person is registered *
Personnel of FINRA members - ANSWER✔✔-required to be qualified with respect to
both training and experience under the UPC
>UPC addresses broker/dealer interaction with one another as well as associated
persons
>the *Two registration categories of FINRA personnel* are *principals* and
*representatives*
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
Questions and Answers
Securities and Exchange Commission (SEC) - ANSWER✔✔->responsible for
supervision of the capital markets
>writes laws that govern the financial markets
>Has the ability to enforce those laws, even if the broker/dealer or associated person is
registered with a self-regulatory authority (SRO).
>Governs publicly traded companies as well as industry professionals
>The Commission can revoke the registration of a broker/dealer, but it has few
punitive powers
>SEC refers criminal cases to the judicial system
>SEC regulates the SROs and supervises their enforcement responsibilities in both the
OTC and exchange secondary markets
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,>President of the United States appoints SEC board members for terms of 5 years, with
advice and consent of the U.S. Senate
Securities Exchange Act of 1934 - ANSWER✔✔-*Established to regulate the trading of
securities after they have been issued* (secondary market) *and to regulate exchanges
and broker/ dealers*
>When the National Association of Securities Dealers (Now FINRA) was formed, the
SEC received the authority to review FINRA disciplinary actions, disapprove rulings
and suspend or revoke registration for failure to comply with its rules
Financial Industry Regulatory Authority (FINRA) - ANSWER✔✔-(Formerly National
Association of Securities Dealers
>The rules and regulations of FINRA are referred to as bylaws, they fall into 4 Main
categories:
*Uniform Practice Code (UPC)*
*Conduct Rules*
*Code of Procedure*
*Code of Arbitration*
>There are also rules establishing the qualifications and registration requirements of
members... *Any broker/dealer who is authorized to transact securities business in the
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,United States is eligible for FINRA membership, except those who have been
suspended or barred from membership due to securities violations*
Uniform Practice Code (UPC) - ANSWER✔✔->relates to dealings between member
firms, covering all transactions in nonexempt securities while providing orderly
completion of dealer-to-dealer transactions
>addresses how broker/dealers interact with each other and with associated persons.
>These rules establish standard industry practice for procedures such as regular way
trade settlement, confirmation delivery, filing of forms such as U4s, U5s, and Form BDs
Conduct Rules - ANSWER✔✔-relate to a member firm's dealings with the public
Code of Procedure - ANSWER✔✔-*Outlines the procedural process in the event of
violations and complaints*
> it is the section of FINRA By-Laws that concerns the handling of securities violations
and complaints
> A customer with a complaint against a member firm or its personnel may submit a
written compliant to any *Department of Enforcement (DOE)*, The *Board of
Governors* may also file a complaint with the DOE
> DOE has the initial jurisdiction for handling complaints
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, Code of Arbitration - ANSWER✔✔-*The purpose of arbitration is to settle inter-
industry disputes* (Ex: One member firm against another, or against a bank, or a
transfer agent)
> It is the section of FINRA By-Laws that is concerned with settling disputes between
dealers and brokers
> Arbitration provides a *cost-effective* method through which disputes are typically
*settled much sooner* than they would be if pursued through the courts
By-Laws define a registered broker/dealer as - ANSWER✔✔-a firm who is registered
with the Commission under the Act of '34. It further defines an associated person as
*>An individual registered under the rules of FINRA*
*>An individual who is directly or indirectly controlled by a member firm, regardless if
the person is registered *
Personnel of FINRA members - ANSWER✔✔-required to be qualified with respect to
both training and experience under the UPC
>UPC addresses broker/dealer interaction with one another as well as associated
persons
>the *Two registration categories of FINRA personnel* are *principals* and
*representatives*
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
