SERIES 99 PRACTICE EXAM QUESTIONS AND
TOPICS
WHAT IS RULE 144 - ANS-VOLUME RESTRICTIONS REGARDNG CONTROL PERSONS
WHAT ARE THE RULES REGARDING RULE 144 - ANS-1. CONTROL PERSONS SELLING
REGISTERED STOCK HELD FOR 1 YEAR
2. CONTROL PERSONS SELLING RESTRICTED STOCK HELD FOR 2 YEARS
CONTROL PERSONS ARE ALWAYS SUBJECT TO VOLUME RESTRICTIONS
ALL REPORTS WHICH A SECURITIES REGULATOR HAS REQUESTED AS A RESULT OF
AN EXAMINATION MUST BE HELD FOR HOW LONG AFTER THE DATE OF THE REPORT?
- ANS-3 YEARS
ALL MANUALS DESCRIBING POLICIES AND PRACTICES WITH RESPECT TO
COMPLIANCE AND SUPERVISION MUST BE HELD FOR HOW LONG? - ANS-3 YEARS
AFTER THE TERMINATION OF THE USE
WHAT IS RULE 4330? - ANS-REQUIRES THAT A FIRM THAT BORROWS FULLY PAID OR
EXCESS MARGIN WHICH ARE CARREID FOR THE ACCOUNT OF ANY CUSTOMER, HAS
TO COMPLY WITH THE REQUIREMENTS OF RULE 15C-3 AND PROVIDE NOTICES TO
CUSTOMERS REGARDING SECURITIES LENDING. PART OF THIS RULE HAS TO DO
WITH APPROPRIATE DETERMINATION
IF CREDITS EXCEED DEBITS, THE DIFFERENCE MUST BE DEPOSITED INTO WHAT BY
WHEN? - ANS-SPECIAL RESERVE ACCOUNT
WITHIN 1 HOUR OF THE BANK OPENING ON THE 2 BD FOLLOWING THE COMPUTATION
WHAT RETAIL COMMUNICATION REQUIRE ROUTINE SPOT CHECKING BY FINRA? -
ANS-1. INDEPENDENLY PREPARED REPRINTS THAT HAVE BEEN ON FILE FOR MORE
THAN 1 YEAR
2. SALES LITERATURE THAT HAS BEEN DISTRIBUTED TO FEWER THAN 25
PROSPECTIVE CUSTOMERS
3. MATERIALS THAT HAVE BEEN APPROVED BY A PRINCIPAL
DOES SALES MATERIAL PREPARED FOR INSTITUTION USE REQUIRE PRINCIPAL
APPROVAL? - ANS-YES - PRIOR PRINCIPAL APPROVAL IS REQUIRED
WHAT IS RULE 17A-3? - ANS-BLOTTER REQUIREMENTS - (RECORDS OF ORIGINAL
ENTRY)
,FOR MUNICIPAL BONDS, WHAT TYPE OF CLIENT IS NOT SUITABLE FOR THIS
INVESTMENT? - ANS-LOW TAX BRACKET, BECAUSE THE LOW YIELD WOULD NOT BE
MADE UP BY TAX SAVINGS
WHAT WOULD CLASS A SHARES INVESTMENT ALLOW A CUSTOMER TO DO? -
ANS-ALLOW AN INVESTOR WITH A LARGE LONG TERM INVESTMENT TO PAY THE
MINIMUM IN SALE CHARGES AND EXPENSES
WHAT IS RULE 15C3-3? AND WHAT ARE THE REQUIREMENTS? - ANS-CUSTOMER
PROTECTION RULE
- RESERVE COMPUTATION WEEKLY
- AKA POSSESSION AND CONTROL
WHAT IS RULE 2150? - ANS-THE IMPROPER USE RULE INVOLVING CONVERSION OF
CUSTOMER FUNDS
HOW DO MUTUAL BONDS WORK WHEN THEY ARE PURCHASED? (RELATED TO TAX
AND WHAT THE RESULT IS) - ANS-WHEN MUTUAL BONDS ARE PURCHASED AT PAR
AND SUBSEQUENTLY SOLD AT A HIGHER PRICE, RESULTS IN A PROFIT THAT IS TAXED
AS CAPITAL GAINS
ARE INTEREST INCOME FROM MUTUAL BONDS TAX EXEMPT OR TAXED
ACCORDINGLY? - ANS-MUTUAL BONDS ARE EXEMPT FROM TAXATION
WHAT IS THE REGULAR WAY SETTLEMENT FOR US GOVERNMENT BONDS? - ANS-THE
NEXT BUSINESS DAY
WHAT IS RULE 15C3-1? - ANS-NET CAPITAL REQUIREMENTS FOR BROKER DEALERS
- REGARDING AGREGATED INDEBTNESS (AI)
- THE RULE PERTAINS TO NET CAP, HOW TO COMPUTE, MIN DOLLAR REQS, MAXIMUM
DEBT TO EQUITY RATION, ETC.
FINRA RULES ON PUBLIC COMMUNICATION EXEMPT WHAT 3 TYPES OF THINGS? -
ANS-1. TOMBSTONE
2. ANNOUNCEMENTS OF PROMOTIONS
3. CHANGES IN ADDRESS
WHAT IS THE SIPC? - ANS-SECURITIES INVESTOR PROTECTION CORPORATION
- ACTS AS A CONGRESS TO PROTECTS CLIENTS OF BROKERAGE FIRMS THAT ARE
FORCED INTO ABNKRUPTCY
- MEMBERSHIP INCLUDES ALL BROKERS AND DEALERS REGISTERED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, ALL MEMBERS OF NATIONAL SECURITIES
AGENCIES, AND MOST OF FINRA MEMBERS
,SIPC ASSESSMENTS ARE GENERALLY BASED ON WHAT? - ANS-THE GROSS VOLUME
OF SECURITIES BUSINESS AND WILL NOT BE AFFECTED BY HOW A MEMBER FIRM
CLEARS ITS BUSINESS
FOR WHAT REASON CAN AN ACAT BE REJECTED? - ANS-IF THE ACCOUNT IS NOT
RECOGNIZED
WHAT IS THE PROSPECTUS DELIVERY REQUIREMENT PERIOD FOR SECURITIES THAT
ARE NON NASDAQ? - ANS-40 DAYS
FOR AN ADDITIONAL ISSUE OFFERING WHERE THE SUBJECT SECURITY IS QUOTED
ON THE OTCBB, WHAT IS THE PROSPECTUS DELIVERY REQUIREMENT PERIOD? -
ANS-40 DAYS
A SECURITY PURCHASED UNDER THE PROVISIONS OF REGULATION S MAY RESOLD
WHEN, HOW, AND THE HOLDING PERIOD? - ANS-WHEN: IMMEDIATLEY
HOW: IN ANY SEC DESIGNATED OFFSHORE SECURITIES MARKET
HOLDING PERIOD: 12 MONTHS BEFORE A SECURITY SOLD PURSUANT TO THE REG S
MAY BE RESOLD IN THE US
WHAT KINDS OF ADVERTISEMENTS MUST BE FILED WITH FINRA BY AN ESTABLISHED
MEMBER? AND WHEN DO THEY HAVE TO BE FILED? - ANS-WHAT: DPPS, INVESTMENT
COMPANIES, GOVERNMENT SECURITIES
WHEN: WITHIN 10 DAYS OF FIRST USE (POST FILING)
UNDER THE CUSTOMER PROTECTION RULE, UNRESOLVED SHORT SECURITIES
DIFFERENCES MUST BE BROUGHT IN HOW MANY DAYS AFTER THE DISCOVERY? -
ANS-IF UNRESOLVED FOR 45 DAYS, THE DIFFERENCE MUST BE BROUGHT IN
WHAT IS THE CURRENCY TRANSACTION REPORT AND WHEN MUST IT BE FILED? -
ANS-WHAT: WHEN A CLIENT DEPOSITS MORE THAN 10K IN A SINGLE BUSINESS DAY
WHEN: FORM MUST BE FILED WITHIN 15 CALENDAR DAYS OF THE CURRENCY
DEPOSIT TO THE IRS
NOTE: HOWEVER A FIRM MAY FILE A SUSPICIOUS ACTIVITY REPORT
WHAT IS A SUSPICIOUS ACTIVITY REPORT? - ANS-AKA SAR
, FINANCIAL INSTITUIONS MUST FILE A SAR WITH THE TREASURY DEPARTMENT'S
FINANCIAL CRIMES ENFORCEMENT NETWORK (FINCEN) WHENEVER A CUSTOMERS
ACTIVITY APPEARS OUT OF THE ORDINARY OR ILLEGAL
REGULATION S PERMITS THE SALE OF UNREGISTERED SECURITIES BY? AND IF REG S
IS MET, THE SECURITIES ARE __________ FROM REGISTRATION WITH THE _____.
HOWEVER TO GET THE ________, THE ISSUE MUST BE _______ IN A(N) ________
TRANSACTION TO __________ RESIDENTS. - ANS-US BASED ISSUERS TO NON US
RESIDENTS
PROVIDES A SAFE HARBOR FOR US BASED ISSUERS THAT SEL SECURITIES OUTSIDE
OF THE US
AS LONG AS THE PROVISIONS OF REGULATION S ARE MET, THE SECURITIES ARE
EXEMPT FROM REGISTRATION WITH THE SEC
TO GET THE EXEMPTION, THE ISSUE MUST BE SOLD IN AN OFFSHORE TRANSACTION
TO NON US RESIDENTS
WHAT ARE 3 SECURITIES THAT ARE DEPOSITORY ELIGIBLE? - ANS-1. CORPORATE
DEBT
2. WARRANTS
3. RIGHTS
WITH A COMPELLING REASON, A BULK TRANSFER OF VARIBLE ANNUITIES MAY BE
ACCOMPLISHED BY USE OF WHAT? BUT WHAT MUST A MEMBER FIRM OBTAIN? -
ANS-A NEGATIVE RESPONSE LETTER.
HOWEVER, A MEMBER MUST OBTAIN AFFIRMATIVE CONSENT FROM A CUSTOMER TO
DIRECT A CHANGE IN BD OR REP OF RECORD FOR EITHER A MUTUAL FUND OR
VARIABLE ANNUITY
A CLIENT SIGNED CHANGE IN BD FORM IS DEEMED AFFIRMATIVE CONSENT.
A NEGATIVE RESPONSE LETTER IS NOT PERMITTED, HOWEVER WITH A COMPELLING
REASON, A NEGATIVE RESPONSE LETTER IS PERMISSIBLE FOR BULK TRANSFERS
WHAT 2 TYPES OF SECURITIES ARE EXEMPT FROM TRACE REPORTING? - ANS-1. US
GOVERNMENT
2. MUNICIPAL BONDS
WHAT TYPE OF SECURITY IS REPORTED THROUGH EMMA? - ANS-MUNICIPAL DEBT
TRADES
TOPICS
WHAT IS RULE 144 - ANS-VOLUME RESTRICTIONS REGARDNG CONTROL PERSONS
WHAT ARE THE RULES REGARDING RULE 144 - ANS-1. CONTROL PERSONS SELLING
REGISTERED STOCK HELD FOR 1 YEAR
2. CONTROL PERSONS SELLING RESTRICTED STOCK HELD FOR 2 YEARS
CONTROL PERSONS ARE ALWAYS SUBJECT TO VOLUME RESTRICTIONS
ALL REPORTS WHICH A SECURITIES REGULATOR HAS REQUESTED AS A RESULT OF
AN EXAMINATION MUST BE HELD FOR HOW LONG AFTER THE DATE OF THE REPORT?
- ANS-3 YEARS
ALL MANUALS DESCRIBING POLICIES AND PRACTICES WITH RESPECT TO
COMPLIANCE AND SUPERVISION MUST BE HELD FOR HOW LONG? - ANS-3 YEARS
AFTER THE TERMINATION OF THE USE
WHAT IS RULE 4330? - ANS-REQUIRES THAT A FIRM THAT BORROWS FULLY PAID OR
EXCESS MARGIN WHICH ARE CARREID FOR THE ACCOUNT OF ANY CUSTOMER, HAS
TO COMPLY WITH THE REQUIREMENTS OF RULE 15C-3 AND PROVIDE NOTICES TO
CUSTOMERS REGARDING SECURITIES LENDING. PART OF THIS RULE HAS TO DO
WITH APPROPRIATE DETERMINATION
IF CREDITS EXCEED DEBITS, THE DIFFERENCE MUST BE DEPOSITED INTO WHAT BY
WHEN? - ANS-SPECIAL RESERVE ACCOUNT
WITHIN 1 HOUR OF THE BANK OPENING ON THE 2 BD FOLLOWING THE COMPUTATION
WHAT RETAIL COMMUNICATION REQUIRE ROUTINE SPOT CHECKING BY FINRA? -
ANS-1. INDEPENDENLY PREPARED REPRINTS THAT HAVE BEEN ON FILE FOR MORE
THAN 1 YEAR
2. SALES LITERATURE THAT HAS BEEN DISTRIBUTED TO FEWER THAN 25
PROSPECTIVE CUSTOMERS
3. MATERIALS THAT HAVE BEEN APPROVED BY A PRINCIPAL
DOES SALES MATERIAL PREPARED FOR INSTITUTION USE REQUIRE PRINCIPAL
APPROVAL? - ANS-YES - PRIOR PRINCIPAL APPROVAL IS REQUIRED
WHAT IS RULE 17A-3? - ANS-BLOTTER REQUIREMENTS - (RECORDS OF ORIGINAL
ENTRY)
,FOR MUNICIPAL BONDS, WHAT TYPE OF CLIENT IS NOT SUITABLE FOR THIS
INVESTMENT? - ANS-LOW TAX BRACKET, BECAUSE THE LOW YIELD WOULD NOT BE
MADE UP BY TAX SAVINGS
WHAT WOULD CLASS A SHARES INVESTMENT ALLOW A CUSTOMER TO DO? -
ANS-ALLOW AN INVESTOR WITH A LARGE LONG TERM INVESTMENT TO PAY THE
MINIMUM IN SALE CHARGES AND EXPENSES
WHAT IS RULE 15C3-3? AND WHAT ARE THE REQUIREMENTS? - ANS-CUSTOMER
PROTECTION RULE
- RESERVE COMPUTATION WEEKLY
- AKA POSSESSION AND CONTROL
WHAT IS RULE 2150? - ANS-THE IMPROPER USE RULE INVOLVING CONVERSION OF
CUSTOMER FUNDS
HOW DO MUTUAL BONDS WORK WHEN THEY ARE PURCHASED? (RELATED TO TAX
AND WHAT THE RESULT IS) - ANS-WHEN MUTUAL BONDS ARE PURCHASED AT PAR
AND SUBSEQUENTLY SOLD AT A HIGHER PRICE, RESULTS IN A PROFIT THAT IS TAXED
AS CAPITAL GAINS
ARE INTEREST INCOME FROM MUTUAL BONDS TAX EXEMPT OR TAXED
ACCORDINGLY? - ANS-MUTUAL BONDS ARE EXEMPT FROM TAXATION
WHAT IS THE REGULAR WAY SETTLEMENT FOR US GOVERNMENT BONDS? - ANS-THE
NEXT BUSINESS DAY
WHAT IS RULE 15C3-1? - ANS-NET CAPITAL REQUIREMENTS FOR BROKER DEALERS
- REGARDING AGREGATED INDEBTNESS (AI)
- THE RULE PERTAINS TO NET CAP, HOW TO COMPUTE, MIN DOLLAR REQS, MAXIMUM
DEBT TO EQUITY RATION, ETC.
FINRA RULES ON PUBLIC COMMUNICATION EXEMPT WHAT 3 TYPES OF THINGS? -
ANS-1. TOMBSTONE
2. ANNOUNCEMENTS OF PROMOTIONS
3. CHANGES IN ADDRESS
WHAT IS THE SIPC? - ANS-SECURITIES INVESTOR PROTECTION CORPORATION
- ACTS AS A CONGRESS TO PROTECTS CLIENTS OF BROKERAGE FIRMS THAT ARE
FORCED INTO ABNKRUPTCY
- MEMBERSHIP INCLUDES ALL BROKERS AND DEALERS REGISTERED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, ALL MEMBERS OF NATIONAL SECURITIES
AGENCIES, AND MOST OF FINRA MEMBERS
,SIPC ASSESSMENTS ARE GENERALLY BASED ON WHAT? - ANS-THE GROSS VOLUME
OF SECURITIES BUSINESS AND WILL NOT BE AFFECTED BY HOW A MEMBER FIRM
CLEARS ITS BUSINESS
FOR WHAT REASON CAN AN ACAT BE REJECTED? - ANS-IF THE ACCOUNT IS NOT
RECOGNIZED
WHAT IS THE PROSPECTUS DELIVERY REQUIREMENT PERIOD FOR SECURITIES THAT
ARE NON NASDAQ? - ANS-40 DAYS
FOR AN ADDITIONAL ISSUE OFFERING WHERE THE SUBJECT SECURITY IS QUOTED
ON THE OTCBB, WHAT IS THE PROSPECTUS DELIVERY REQUIREMENT PERIOD? -
ANS-40 DAYS
A SECURITY PURCHASED UNDER THE PROVISIONS OF REGULATION S MAY RESOLD
WHEN, HOW, AND THE HOLDING PERIOD? - ANS-WHEN: IMMEDIATLEY
HOW: IN ANY SEC DESIGNATED OFFSHORE SECURITIES MARKET
HOLDING PERIOD: 12 MONTHS BEFORE A SECURITY SOLD PURSUANT TO THE REG S
MAY BE RESOLD IN THE US
WHAT KINDS OF ADVERTISEMENTS MUST BE FILED WITH FINRA BY AN ESTABLISHED
MEMBER? AND WHEN DO THEY HAVE TO BE FILED? - ANS-WHAT: DPPS, INVESTMENT
COMPANIES, GOVERNMENT SECURITIES
WHEN: WITHIN 10 DAYS OF FIRST USE (POST FILING)
UNDER THE CUSTOMER PROTECTION RULE, UNRESOLVED SHORT SECURITIES
DIFFERENCES MUST BE BROUGHT IN HOW MANY DAYS AFTER THE DISCOVERY? -
ANS-IF UNRESOLVED FOR 45 DAYS, THE DIFFERENCE MUST BE BROUGHT IN
WHAT IS THE CURRENCY TRANSACTION REPORT AND WHEN MUST IT BE FILED? -
ANS-WHAT: WHEN A CLIENT DEPOSITS MORE THAN 10K IN A SINGLE BUSINESS DAY
WHEN: FORM MUST BE FILED WITHIN 15 CALENDAR DAYS OF THE CURRENCY
DEPOSIT TO THE IRS
NOTE: HOWEVER A FIRM MAY FILE A SUSPICIOUS ACTIVITY REPORT
WHAT IS A SUSPICIOUS ACTIVITY REPORT? - ANS-AKA SAR
, FINANCIAL INSTITUIONS MUST FILE A SAR WITH THE TREASURY DEPARTMENT'S
FINANCIAL CRIMES ENFORCEMENT NETWORK (FINCEN) WHENEVER A CUSTOMERS
ACTIVITY APPEARS OUT OF THE ORDINARY OR ILLEGAL
REGULATION S PERMITS THE SALE OF UNREGISTERED SECURITIES BY? AND IF REG S
IS MET, THE SECURITIES ARE __________ FROM REGISTRATION WITH THE _____.
HOWEVER TO GET THE ________, THE ISSUE MUST BE _______ IN A(N) ________
TRANSACTION TO __________ RESIDENTS. - ANS-US BASED ISSUERS TO NON US
RESIDENTS
PROVIDES A SAFE HARBOR FOR US BASED ISSUERS THAT SEL SECURITIES OUTSIDE
OF THE US
AS LONG AS THE PROVISIONS OF REGULATION S ARE MET, THE SECURITIES ARE
EXEMPT FROM REGISTRATION WITH THE SEC
TO GET THE EXEMPTION, THE ISSUE MUST BE SOLD IN AN OFFSHORE TRANSACTION
TO NON US RESIDENTS
WHAT ARE 3 SECURITIES THAT ARE DEPOSITORY ELIGIBLE? - ANS-1. CORPORATE
DEBT
2. WARRANTS
3. RIGHTS
WITH A COMPELLING REASON, A BULK TRANSFER OF VARIBLE ANNUITIES MAY BE
ACCOMPLISHED BY USE OF WHAT? BUT WHAT MUST A MEMBER FIRM OBTAIN? -
ANS-A NEGATIVE RESPONSE LETTER.
HOWEVER, A MEMBER MUST OBTAIN AFFIRMATIVE CONSENT FROM A CUSTOMER TO
DIRECT A CHANGE IN BD OR REP OF RECORD FOR EITHER A MUTUAL FUND OR
VARIABLE ANNUITY
A CLIENT SIGNED CHANGE IN BD FORM IS DEEMED AFFIRMATIVE CONSENT.
A NEGATIVE RESPONSE LETTER IS NOT PERMITTED, HOWEVER WITH A COMPELLING
REASON, A NEGATIVE RESPONSE LETTER IS PERMISSIBLE FOR BULK TRANSFERS
WHAT 2 TYPES OF SECURITIES ARE EXEMPT FROM TRACE REPORTING? - ANS-1. US
GOVERNMENT
2. MUNICIPAL BONDS
WHAT TYPE OF SECURITY IS REPORTED THROUGH EMMA? - ANS-MUNICIPAL DEBT
TRADES
