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28 Cards in this Set
- Front
- Back
What are FINRA's registration requirements?
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Filing of Form U4 and fingerprint card with CRD (Central Registration Depository)
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What does a form U5 do?
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Terminate registration
-Must be submitted within 30 days -Copy provided to RR -Re-qualification required after 2 years |
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What are the statutory disqualifications?
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Having been convicted within the past 10 years of a felony or misdemeanor involving funds or securities
Expulsion from regulatory agencies |
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What are investment banking activities?
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Advising:
Debt or equity securities offerings Private placements and public offerings Origination Underwriting Marketing Structuring Syndicating Pricing Managing and stabilizing offerings Individuals engaged in Public Finance or DPP offerings are not considered IB reps |
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What is the waiting period if you fail?
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30 days then 180 days
Subject to annual compliance meeting or interview |
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What are the two types of continuing education?
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Regulatory
-Initiated on second anniversary and ever three years after -If not completed within 120 days registration revoked Firm element -Training directed by the firm -Re-evaluated annually |
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What did the 34' act do?
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Cut down on manipulation
Ended: Front running (trading ahead of clients) Painting the tape (creating misleading appearance of trading) Pegging (Manipulation to keep price from calling) Capping (Manipulation to keep price from rising) *pro forma's must clearly state assumptions |
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What are the penalties for insider trading?
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Individuals
-Max of 5mm fine and 20 years in prison Corps -Max fine of 25mm Civil -Disgorgement of profit and up to three times the damages Bounties of up to 10% |
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What is SEC rule 10b-18?
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Helps cut down on I.T
Deals with purchase of equity securities by issues -Use one BD -No trades in past 10 or last 30 minutes of day -No purchase at price higher than highest indi bid or last transaction (whichever is greater) -Purchase volume may not exceed 25 percent of ADTV |
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What is insider trading?
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Posessing materials and non-public information to make profit or avoid loss
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What do Written supervisory procedures do?
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Establish a branch office
-Location where a member firm effects, or attempts to effect, securities transactions |
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What is a non-branch office?
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Back office or ops office
Office of convenience Floor of exchange Temp or back up office Temp location used less than 30 biz days per year Office where less than 25 securities transactions are effected annually Registered reps primary residence |
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What makes a branch office an OSJ?
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OSJ = office of supervisory jurisdiction
Branch considered an OSJ if it: -Orders or executes market making -Structures offerings -Maintains custody of customer assets -Final approval for opening new accounts -Review and approve customer orders -Supervising one or more offices Every OSJ must be supervised by a principal who approves communication Each OSJ must maintain of complaints |
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What are the AML program requirements?
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-Designate an AML Compliance Officer for firm (who must be identified to FINRA and know the Bank Secrecy Act)
-Contain procedures designed to detect violations -Cause the reporting of certain transactions -Be tested on an annual basis -Provide for ongoing training for appropriate staff *No requirement that officer must have individual training |
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What is CIP?
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Customer Identification Program
FINRA requires each BD to establish a written CIP -Verify identify of person seeking to open account -Maintain records of the info used to verify identity -Check name against a list maintained by the treasury department |
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What is OFAC list?
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Office of Foreign Assets Control List
Suspected terrorist countries include: CUBA, Iran, North Korea and Syria If blocked entity appears on list all transactions must be blocked and law notified |
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What is the bank secrecy act?
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Government legislation that was created in 1970 to prevent financial institutions from being used as tools by criminals to hide or launder their ill-gotten gains
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What are the BSA required reports?
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Currency Transaction Report
(CTR) (FinCEN 104) -Filed for transactions by single customer and structured transactions during one business day exceeding $10,000 Currency / Monetary Instrument Report (CMIR) -Filed with physical transport or receipt of cash exceeding 10k into the US Suspicious Activity Report (SAR) -Filed when transaction(s) equal or exceed 5k and the firm is suspicious |
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What are the first two SRO business conduct rules?
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Private Securities Transactions
(Selling away) -Securities activities outside the reg scope of a persons employment -Associated person must provide notice to employer -If associate person is compensated a member must approve and it must be recorded on the member's books Outside Business Activity -Non securites activities for which associated person is compensated -Associated person must provide written notice to employer -Charitable activities need not be reported |
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What are the last two SRO business conduct rules?
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Accounts for Employees
-Opening accounts are required to provide written notice to employer Executing firm must -Provide written notification to the employer of the intention to open account -Send duplicate confirmations and statements (if requested) |
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What do BSA rules NOT apply to?
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Transactions involving redeemable investment company shares, variable contracts or unit investment trusts
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What do SRO rules say about borrowing or lending to clients?
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Registered persons are prohibited from unless:
Customer is immediate family member Customer is a financial institution involved in extending credit or lending Both parties are registered at the same firm Loan is based on personal relationship Loan is based on dependent business relationship |
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What does SRO say about sharing in client profits and losses?
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Prohibited unless a joint account is created
Sharing must be proportionate to employee's financial contribution Gift limit - 100 bucks *No payments can be made to non-member firm for securities related business |
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What are customer complaints?
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Written statements from customers which involved grievances related to the broker-dealer's securities business
Firms must maintain file of these Quarterly reports are provided to FINRA |
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What is the disciplinary action for members who violate industry rules?
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Complain filed
-Action initiated Copy of complain and letter of Acceptance, Waiver and Consent (AWC) -Responded allowed to respond or hearing held Hearing panel -Censure, fine, suspension, Appeal -To National Adjudicatory Council, then SEC then Fed Court |
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What is the code of arbitration?
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System offered for resolving disputes, not rule violations
-Decisions binding and cant be appealed -Six year status of limitations |
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What are the different kinds of arbitration?
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For disputes involving public customers
-Majority of panel must be from outside the securities industry -Predisposed arbitration agreements are allowed but may not limit awards For disputes involving registered persons and other member firms -If disputes involve a member firm's own employees, mandatory arbitration is not required if the dispute involves discrimination or harassment claims |
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What is simplified arbitration?
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For disputes not exceeding 25k
One single arbitrator, no hearing conducted |