Series 24 — General Securities Principal

Under FINRA Rule 3110, a broker-dealer's supervisory system must, at a minimum, include:

1. AA guarantee that no rule violations will ever occur
2. BApproval of the firm's business plan by the SEC
3. CWritten procedures and qualified principals to carry them outCorrect
4. DDaily approval of every trade by the firm's CEO

Why: Rule 3110 requires a supervisory system reasonably designed to achieve compliance, including written supervisory procedures (WSPs) and designated, appropriately registered principals. A system cannot guarantee zero violations, and there is no requirement for CEO approval of every trade or SEC approval of the business plan.

During the cooling-off period of a registered public offering, which document may be distributed to prospective investors?

1. AA confirmation of sale
2. BA final prospectus with the effective price
3. CA preliminary prospectus (red herring)Correct
4. DA research report recommending the issuer

Why: During the cooling-off period only a preliminary prospectus, or red herring, may be circulated to gauge interest; it omits the final price and states that the registration is not yet effective. No sales may be finalized until the registration is effective.