FINRA Series 6 — All Questions

A person who becomes disabled at age 45 in 2026 asks about opening an ABLE account. What is the answer?

• a.Ineligible, because onset must be before age 26
• b.Eligible only if a parent owns the account
• c.Eligible, because onset must be before age 46✓
• d.Ineligible, because onset must be before age 40

Beginning in 2026, an ABLE account requires disability onset before age 46, so onset at 45 qualifies. The earlier age 26 limit was expanded. Age 40 was never the rule. The beneficiary can generally own the account, so parental ownership is not a condition.IRC Section 529A

An ABLE account balance rises to $120,000. What happens to the beneficiary's SSI benefit?

• a.Both SSI and Medicaid end immediately and permanently
• b.Nothing changes, since ABLE balances are fully excluded
• c.SSI continues unchanged, but Medicaid ends
• d.SSI cash is suspended over $100,000; Medicaid continues✓

Only the first $100,000 of an ABLE balance is disregarded for SSI, so the cash benefit is suspended above that, while Medicaid eligibility continues. Losing Medicaid is not part of the rule. A full exclusion is not allowed, and the SSI cash payment is affected.IRC Section 529A; Social Security Act

A client was born in 1962. At what age must she begin required minimum distributions from her traditional IRA?

• a.Age 75✓
• b.Age 72
• c.Age 70½
• d.Age 73

Under SECURE 2.0, people born in 1960 or later begin RMDs at age 75. Age 73 applies to those born from 1951 to 1959. Age 72 applied under earlier law, and 70½ applied before that.IRC Section 401(a)(9)

A traditional IRA owner misses part of an RMD, leaving a $4,000 shortfall. The error is not corrected. What is the excise tax?

• a.$0, since the penalty applies to Roth accounts only
• b.$400, which is 10% of the shortfall
• c.$2,000, which is 50% of the shortfall
• d.$1,000, which is 25% of the shortfall✓

The excise tax is 25% of the shortfall, reduced to 10% only if corrected within the correction window, so $1,000 here. Fifty percent was the old rate, replaced by SECURE 2.0. The 10% rate applies only when timely corrected. The penalty applies to traditional IRAs, while Roth IRAs have no owner RMDs.IRC Section 4974

Which statement about a qualified charitable distribution is correct?

• a.It is an itemized deduction and is also taxable income
• b.It cannot count toward the owner's required distribution
• c.Owner must be 73, and the check is made out to the owner first
• d.Owner is at least 70½ and funds go straight from the trustee✓

A QCD requires an owner of 70½ or older and a direct transfer to the charity, which keeps the amount out of income and lets it satisfy the RMD. Requiring age 73 is wrong. Receiving the check first spoils the exclusion. A QCD is excluded from income, not deducted and taxed.IRC Section 408(d)(8)

A 50-year-old owns a Roth IRA with $30,000 of contributions, a $10,000 conversion made years ago, and $20,000 of earnings. She withdraws $25,000. What is the tax result?

• a.The entire $25,000 is taxable as ordinary income
• b.Nothing is taxed, but 10% applies to all $25,000
• c.None, since contributions come out first✓
• d.$8,333 is taxable under a pro rata rule

Roth withdrawals come out in order: contributions, then conversions, then earnings, so the $25,000 is fully contributions and is neither taxed nor penalized. Taxing it all ignores ordering. A pro rata rule is for traditional IRAs with basis. Contributions carry no penalty.IRC Section 408A(d)(4)

A 56-year-old leaves her employer and wants penalty-free access. Which statement is correct?

• a.The 10% tax applies to every distribution, with no exceptions
• b.The exception requires being at least age 62
• c.The plan is exempt, but a rollover IRA loses the exception✓
• d.Distributions from any IRA are exempt from the 10% tax

Separation from service in or after the year turning 55 exempts distributions from that employer's plan, but not from IRAs, including one funded by a rollover. IRAs have their own exceptions. The statement that there are no exceptions is false, and age 62 is not the threshold.IRC Section 72(t)(2)(A)(v)

An investor sells a fund at a loss in a taxable account and 10 days later buys the same fund in her IRA. What is the result?

• a.The loss is disallowed, then added to the IRA basis
• b.The loss is deferred until the fund is sold in the IRA
• c.The loss is disallowed and is never recovered through the IRA✓
• d.The loss is allowed, because the IRA is a separate account

Revenue Ruling 2008-5 treats the IRA purchase as a replacement, so the loss is disallowed, and since an IRA basis does not adjust, the loss never returns. Treating the IRA as separate ignores the ruling. A basis addition and deferral both assume the usual wash sale remedy, which fails because the shares sit in a tax-deferred account.IRC Section 1091; Rev. Rul. 2008-5

An investor buys 100 shares at $50, sells them at $40, and 10 days later buys 100 shares of the same stock at $42. What is the basis of the new shares?

• a.$5,000
• b.$4,200
• c.$5,200✓
• d.$4,000

The $1,000 loss is disallowed and added to the cost of the replacement shares: $4,200 plus $1,000 is $5,200. The raw purchase price of $4,200 ignores the adjustment. The sale proceeds of $4,000 are unrelated. The original $5,000 cost ignores the new purchase.IRC Section 1091

A single taxpayer has modified AGI of $230,000, which includes $50,000 of net investment income. What is her net investment income tax?

• a.$1,140✓
• b.$0
• c.$1,900
• d.$8,740

The tax is 3.8% of the lesser of net investment income ($50,000) or the excess of MAGI over $200,000 ($30,000). Thirty thousand dollars times 3.8% is $1,140. Using the full $50,000 gives $1,900. Using the entire MAGI gives $8,740. The tax applies because MAGI exceeds the threshold.IRC Section 1411

A REIT shareholder receives a distribution that the REIT designates partly as return of capital. How is the return of capital portion treated?

• a.It reduces cost basis and is not taxed until basis is used up✓
• b.It is taxed in full as ordinary income this year
• c.It is taxed this year as a long-term capital gain
• d.It is permanently exempt from tax at every level

A return of capital lowers the shareholder's basis rather than being current income, so tax is deferred until the shares are sold or basis reaches zero. Immediate ordinary income applies to the ordinary portion. Capital gains treatment applies to the capital gain portion. Return of capital is deferred, not permanently exempt.IRC Section 857

A fund's NAV rose from $20.00 to $21.00 during the year, and it paid $1.50 in distributions. What is the total return?

• a.5.0%
• b.7.5%
• c.11.9%
• d.12.5%✓

Total return is the change in NAV plus distributions over the beginning NAV: ($1.00 plus $1.50) divided by $20.00 is 12.5%. Excluding distributions gives 5.0%, and using only distributions gives 7.5%. Dividing by the ending NAV gives 11.9%, which uses the wrong base.

An investor puts $500 a month into a fund for three months at prices of $10, $20 and $10. What is the average cost per share?

• a.$13.33
• b.$12.00✓
• c.$20.00
• d.$10.00

The investor buys 50, 25 and 50 shares, which is 125 shares for $1,500, an average cost of $12.00. The simple average price of $13.33 ignores that more shares were bought at lower prices. Neither the lowest nor the highest price is the average cost.

A tax-exempt municipal bond fund yields 3.5%. For an investor in the 30% federal bracket, what taxable yield is equivalent?

• a.4.55%
• b.5.0%✓
• c.2.45%
• d.3.5%

The tax-equivalent yield is the tax-free yield divided by one minus the bracket: 3.5% divided by 0.70 is 5.0%. Multiplying by 1.30 understates it, and multiplying by 0.70 does the reverse of the correct operation. The bracket determines how much a tax exemption is worth.

Under SEC Rule 2a-7, a money market fund's dollar-weighted average portfolio maturity may not exceed:

• a.90 days
• b.397 days
• c.60 days✓
• d.120 days

The weighted average maturity cap is 60 days. Ninety days was the limit before the 2010 amendments and no longer applies. The 120-day figure is the separate cap on weighted average life, which counts a floating-rate security's final maturity rather than its next reset. The 397-day figure limits the remaining maturity of any single portfolio security.17 CFR 270.2a-7

Under Rule 2a-7 as amended in 2023, what share of a money market fund's total assets must be weekly liquid assets?

• a.At least 50%✓
• b.At least 30%
• c.At least 25%
• d.At least 10%

The weekly liquid asset floor is 50% of total assets. The 30% and 10% figures were the old weekly and daily minimums that the 2023 amendments replaced. The 25% figure is the new daily liquid asset minimum for taxable funds, not the weekly one.17 CFR 270.2a-7

A fund wants to call itself a government money market fund. It must invest at least what portion of its assets in cash, government securities and repurchase agreements fully collateralized by them?

• a.80%
• b.90%
• c.99.5%✓
• d.95%

A government money market fund must hold 99.5% or more of total assets in cash, government securities and fully collateralized repurchase agreements. Eighty percent is the threshold from the fund names rule, which is a different test. Ninety and ninety-five percent are not thresholds in Rule 2a-7.17 CFR 270.2a-7

Which money market fund must price its shares at a floating net asset value instead of a stable $1.00?

• a.A retail municipal fund holding short-term tax-exempt notes
• b.A government fund holding Treasury bills and repurchase agreements
• c.A retail prime fund limited to natural persons
• d.An institutional prime fund open to corporations and trusts✓

Institutional prime funds, whose shareholders include corporations and trusts, must float their NAV. Retail funds, which limit ownership to natural persons, may keep a stable price whether they hold prime or municipal paper. Government funds may also keep a stable price because their holdings carry little credit or liquidity risk.17 CFR 270.2a-7

How does an interval fund's liquidity differ from that of an open-end mutual fund?

• a.It lists on an exchange where shares trade at a premium or discount
• b.It offers to repurchase 5% to 25% of its shares at net asset value on a set schedule✓
• c.It must redeem any shareholder request within seven days at the next close
• d.It repurchases shares only when its board finds that cash is available

An interval fund is a closed-end fund that makes periodic repurchase offers for between 5% and 25% of its shares at net asset value, so an investor can sell only at those scheduled windows. The seven-day redemption duty belongs to open-end funds under Section 22(e). Interval fund shares are not exchange-listed and so do not trade at a premium or discount. The offers are mandatory on the stated schedule, not at the board's discretion.17 CFR 270.23c-3 (interval funds)

How are new shares of an exchange-traded fund created?

• a.The fund's underwriter sells new shares at the public offering price in a continuous offering
• b.The fund issues its full share count once and lists it, with no later issuance
• c.A retail investor buys newly issued shares directly from the fund at the closing NAV
• d.An authorized participant delivers a basket of securities to the fund for a creation unit✓

ETF shares are created in large blocks called creation units when an authorized participant delivers a basket of the underlying securities to the fund. Retail investors do not buy from the fund; they trade on an exchange at market price. Open-end mutual funds, not ETFs, sell continuously at a public offering price through an underwriter. Issuing a fixed number of shares once describes a closed-end fund, which an ETF is not.Rule 6c-11 / ETF structure

An ETF's shares trade at $50.60 while the net asset value of its holdings is $50.00. What action by an authorized participant tends to pull the market price back toward NAV?

• a.Waiting for the fund's board to cut the offering price at the next close
• b.Buying shares on the exchange and redeeming them for the underlying basket
• c.Buying the basket of securities and delivering it for new shares to sell on the exchange✓
• d.Asking the fund to suspend creations until the premium narrows

A premium means the shares cost more than the holdings. An authorized participant profits by buying the basket, delivering it for new shares and selling those shares, and the added supply pushes the price down. Buying shares to redeem them for the basket is the move for a discount, not a premium. An ETF has no offering price that a board adjusts, and suspending creations would let the premium persist.Rule 6c-11 / ETF structure

A closed-end fund sells shares in its initial public offering at $20.00 per share. The only deduction is an underwriting sales load of 4.5% of the offering price. What is the fund's net asset value per share immediately after the offering?

• a.$19.10✓
• b.$20.00
• c.$19.55
• d.$19.14

The load is 4.5% of $20.00, or $0.90, so $19.10 goes to work for the fund. Dividing $20.00 by 1.045 gives $19.14, which treats the load as a markup on NAV instead of a percentage of the offering price. Taking only half the load, as if it were 2.25%, gives $19.55. The full $20.00 ignores the load, which is why closed-end funds often open below their offering price.Investment Company Act of 1940

A closed-end fund has net assets of $60 million and no debt. Keeping 300% asset coverage, how much can it borrow from a bank?

• a.$30 million✓
• b.$180 million
• c.$60 million
• d.$20 million

After borrowing B dollars the fund's assets are $60 million plus B, and coverage of 300% requires that total to be at least three times B. That gives B no greater than $30 million. Dividing the net assets by three gives $20 million, which forgets that the borrowed cash is itself an asset. Borrowing $60 million would leave coverage of only 200%. Three times net assets confuses the ratio with the loan amount.Investment Company Act of 1940 Section 18(a)(1)

A customer wants a fixed portfolio of municipal bonds that is held until a stated termination date, with no manager trading. Which product fits?

• a.A variable annuity with a bond subaccount
• b.An open-end bond fund with a professional adviser
• c.A closed-end fund that trades on an exchange
• d.A unit investment trust holding a set group of bonds✓

A unit investment trust buys a fixed portfolio, holds it with no active trading, and terminates on a stated date. An open-end fund is run by an adviser who changes holdings. A closed-end fund also has active management and its price swings with market supply and demand. A variable annuity adds insurance features and a managed subaccount that a customer seeking a fixed bond list does not need.Investment Company Act of 1940 Section 4

Under the general limit in the Investment Company Act of 1940, one investment company may not own more than what share of another investment company's outstanding voting stock?

• a.3%✓
• b.10%
• c.5%
• d.25%

The statute caps an acquiring fund at 3% of another fund's voting stock. The 5% limit applies to the share of the acquirer's own assets in any one other fund, and the 10% limit applies to its total holdings of other funds. Twenty-five percent is not a limit in this section.Investment Company Act of 1940 Section 12(d)(1)(A)

A variable annuity owner has annuitized and holds 50 annuity units. The annuity unit value was $30.00 for the first payment and is $33.00 for the next payment. What is the next payment?

• a.$1,350
• b.$1,800
• c.$1,650✓
• d.$1,500

The payment equals units times unit value, and 50 units at $33.00 is $1,650. A payment of $1,500 would be right only for a fixed annuity whose payment never changes. The number of units stays fixed after annuitization, so a rising unit value raises the payment instead of cutting it to $1,350. Adding 20% to reach $1,800 uses the wrong percentage; the unit value rose 10%.Variable annuity valuation

A variable life policyholder dies with an outstanding policy loan. What does the beneficiary receive?

• a.The full death benefit, since the loan is repaid separately from cash value
• b.The guaranteed minimum death benefit increased by the loan
• c.The cash value plus the unpaid loan balance
• d.The death benefit reduced by the loan balance and accrued interest✓

An unpaid policy loan, with its interest, is subtracted from the death benefit paid at death. The loan is a debt against the policy, so the full benefit is not paid out. The beneficiary does not receive cash value on top of the benefit, and a loan can never increase the amount paid.Variable life insurance

Which charge on a variable annuity is usually a flat annual dollar amount instead of a percentage of assets?

• a.The management fee of an underlying fund
• b.The contract maintenance fee✓
• c.The charge for a living benefit rider
• d.The mortality and expense risk charge

The contract maintenance fee covers administration and is typically a flat dollar amount each year. The mortality and expense charge is a percentage of separate account assets. Underlying fund management fees are a percentage of fund assets. Rider charges are a percentage of the benefit base or contract value.Variable annuity charges

A variable annuity's surrender charge starts at 7% in the first contract year and falls 1 percentage point each year. The owner surrenders $40,000 during the fourth contract year, and no free-withdrawal provision applies. What is the surrender charge?

• a.$1,200
• b.$2,800
• c.$1,600✓
• d.$2,000

The schedule is 7%, 6%, 5% and 4% for years one through four, so the fourth year charge is 4% of $40,000, or $1,600. Five percent would be the charge in the third year. Three percent would apply in year five. Seven percent is the first-year rate and would give $2,800.Variable annuity charges

How often may a 529 plan account owner change the investment options for contributions already in the account?

• a.Once per calendar year
• b.Up to two times per calendar year✓
• c.Only at the start of each school year
• d.Up to four times per calendar year

Federal law allows an owner to redirect the investments of existing contributions no more than twice in a calendar year. One change a year is stricter than the law requires. Four is more than it permits. The rule is not tied to the academic calendar.Internal Revenue Code Section 529(b)(4)

A parent takes $10,000 from a 529 plan for a purpose that is not a qualified expense. Thirty percent of the account is earnings. What is the additional federal tax on the withdrawal, apart from income tax?

• a.$1,000
• b.$3,000
• c.$30
• d.$300✓

The earnings share of the distribution is $3,000, which is added to income, and the additional 10% tax applies only to that earnings portion, giving $300. Ten percent of the entire $10,000 would be $1,000, but the contributions come back without the extra tax. Three dollars per hundred of earnings, or $30, miscalculates the rate. The $3,000 is the taxable earnings, not the extra tax.Internal Revenue Code Section 529

A beneficiary's 529 account has been open for 15 years. What is the lifetime limit on rollovers from the account to the beneficiary's Roth IRA?

• a.$50,000
• b.$7,500
• c.$35,000✓
• d.$10,000

A beneficiary may roll up to $35,000 over a lifetime from a long-held 529 account to a Roth IRA, subject to the annual IRA limit and other conditions. Ten thousand dollars is the lifetime cap on student loan repayment from a 529. Fifty thousand is not a limit under this provision. The $7,500 figure is the 2026 annual IRA contribution limit, which restricts each year's rollover but is not the lifetime cap.Internal Revenue Code Section 529(c)(3)(E)

A representative holds only the Investment Company and Variable Contracts Products registration. Which sale would require additional registration?

• a.A variable annuity contract
• b.Units of a unit investment trust
• c.Shares of a listed closed-end fund bought in the secondary market✓
• d.Shares of an open-end bond fund

This registration covers open-end funds, unit investment trusts, variable contracts, municipal fund securities and closed-end funds only during their initial offering. Once a closed-end fund trades on an exchange, selling it requires a broader registration such as the General Securities Representative. The other three products are within the scope of the Series 6.FINRA Rule 1220(b)(7)

A fund has a net asset value of $14.40 and a sales charge of 4% of the public offering price. A customer invests $9,000. How many shares does the customer buy?

• a.576 shares
• b.601 shares
• c.600 shares✓
• d.625 shares

The offering price is $14.40 divided by 0.96, or $15.00, and $9,000 divided by $15.00 is 600 shares. Dividing $9,000 by the NAV of $14.40 gives 625 shares, which ignores the sales charge. Taking 4% off the $9,000 and then dividing by $15.00 gives 576 shares, which charges the load twice. Adding 4% to NAV to reach $14.98 gives 601 shares, but the stated load is a percentage of the offering price, not of NAV.Mutual fund pricing

A mutual fund prices its shares at 4:00 p.m. Eastern. A customer's order is received by the firm at 4:20 p.m. Which price applies?

• a.The net asset value computed at the next pricing time after receipt✓
• b.The average of that day's and the next day's net asset values
• c.The 4:00 p.m. net asset value, because the customer decided before the close
• d.The public offering price in effect at the time the representative took the order

Forward pricing requires orders received after the pricing time to get the next computed price. Giving the earlier price to an order that arrived after the close is late trading, and it is illegal. Averaging two days' prices has no basis in the rule. The offering price is NAV plus any sales charge as computed at the pricing time, not as of whenever the order is taken.Investment Company Act of 1940 Section 22(c) and Rule 22c-1

Under the 2023 money market fund amendments, an institutional prime fund must impose a liquidity fee when its net redemptions for a day exceed what share of net assets?

• a.5%✓
• b.1%
• c.25%
• d.10%

The mandatory liquidity fee is triggered when daily net redemptions exceed 5% of the fund's net assets, unless the fee would be de minimis. Ten percent was the old daily liquid asset minimum. Twenty-five percent is the daily liquid asset minimum, a different test. One percent is not a trigger in the rule.17 CFR 270.2a-7(c)(2)

A representative submits a complete deferred variable annuity application package to the office of supervisory jurisdiction. Within what time must a registered principal review it for approval or rejection?

• a.Two business days after the customer signs the application
• b.Fifteen calendar days after the contract is issued
• c.Seven business days after the office receives the complete package✓
• d.The end of the next business day after the order is entered

Rule 2330 gives the principal seven business days from the office's receipt of a complete application package. The clock starts with the complete package at the office, not at the customer's signature. Review is also required before the contract is issued, not after it, so a post-issuance period of fifteen days does not work. A next-day deadline is shorter than the rule requires.FINRA Rule 2330

A principal reviews a proposed exchange of one deferred variable annuity for another. Which factor must the principal consider?

• a.Whether the customer has had another deferred annuity exchange within the preceding 36 months✓
• b.Whether the customer's state allows a free-look period of at least ten days
• c.Whether the new contract's separate account outperformed the old one last year
• d.Whether the representative earns a higher commission on the new contract

Rule 2330 lists another exchange within 36 months among the factors a principal weighs, along with surrender charges, lost benefits and new fees. Last year's separate account return says nothing about suitability for this customer. Higher commission is a conflict to be controlled, not a factor supporting the exchange. The state free-look period is a contract term unrelated to the exchange review.FINRA Rule 2330

A broker-dealer that carries customer accounts must have its anti-money laundering program independently tested at what interval?

• a.Every two years
• b.Only after a regulatory examination
• c.Every three years
• d.Annually✓

Firms that carry customer accounts or execute customer transactions must test annually by a qualified independent person. Testing every two years is allowed only for firms that do not execute transactions for customers or hold customer accounts, such as proprietary-trading-only firms. A three-year cycle is the inspection cycle for non-supervising branch offices under Rule 3110, not the AML test. Testing only after an exam would leave gaps.FINRA Rule 3310

A customer files a written complaint against a representative. When must the member report statistical and summary information on complaints to FINRA?

• a.Annually, with the firm's audited financial statements
• b.Within 30 calendar days of each complaint's receipt
• c.Only when the complaint alleges theft or forgery
• d.Quarterly, by the 15th day of the month after the quarter ends✓

Rule 4530 requires complaint statistics and summary information to be filed quarterly, by the 15th day of the month after each calendar quarter. The 30-calendar-day deadline applies to specified events, such as a written customer complaint alleging theft or misappropriation, not to routine reporting. An annual filing would be too infrequent. Complaints that do not allege theft or forgery still count toward the quarterly report.FINRA Rule 4530

How often must a member inspect a branch office that does not supervise other locations?

• a.At least once every three years✓
• b.Only after a customer complaint about the branch is received
• c.At least once every five years, if the branch has no customer complaints
• d.At least once every year, the same as an office of supervisory jurisdiction

A member must inspect non-supervising branch offices at least every three years, while each office of supervisory jurisdiction and each branch that supervises other locations gets an annual inspection, so annual inspection is not required here. Five years is longer than the rule allows, and a clean complaint record is not an exception. Inspections follow a schedule and are not triggered by complaints.FINRA Rule 3110(c)

A customer tells a representative, "Buy 500 shares of this ETF whenever and at whatever price you think best." How long does this time-and-price discretion last?

• a.For the 13-month life of the customer's letter of intent
• b.For 30 days unless the account is closed
• c.Until the customer revokes it in writing
• d.Through the end of that business day, unless the customer gave written contrary terms✓

When the customer picks the product and amount and leaves only time and price to the representative, that discretion is limited to the day it is given unless the customer signs and dates a contrary written instruction. It does not run until revoked and it is not a 30-day grant. A letter of intent covers breakpoint pricing and has no bearing on discretion.FINRA Rule 3260

A member reasonably believes a 72-year-old customer is being financially exploited and places a temporary hold on a disbursement. Within what time must the member try to notify the customer's trusted contact person?

• a.Fifteen business days after placing the hold
• b.Two business days after placing the hold✓
• c.Thirty calendar days after the disbursement request
• d.No notice is allowed until the hold ends

Rule 2165 requires prompt notice to the trusted contact, and no later than two business days after the hold begins. The fifteen-business-day figure is how long the initial hold lasts, not the notice deadline. A 30-day notice period would defeat the purpose of the rule. Notice is not prohibited during the hold; it is required.FINRA Rule 2165

A firm uses a retail communication that describes a registered investment company. Within how many business days of first use must it be filed with FINRA?

• a.15 calendar days
• b.3 business days
• c.30 calendar days
• d.10 business days✓

Retail communications concerning registered investment companies must be filed within 10 business days after first use or publication. Three business days and fifteen days are not filing deadlines. Thirty days is the period used to measure whether a message to more than 25 retail investors counts as retail communication.FINRA Rule 2210(c)

A representative drafts a flyer for a mutual fund that will be sent to 2,000 retail prospects. What approval is required before use?

• a.Approval by FINRA staff before first use
• b.No approval if the flyer repeats the prospectus
• c.Approval by the fund's board of directors
• d.Approval by a registered principal of the firm✓

A registered principal must approve each retail communication before first use, and the approval does not depend on who wrote it. A fund board does not approve a broker-dealer's marketing. FINRA does not pre-approve most retail communications; filing, where required, happens after first use. Repeating the prospectus does not remove the principal approval requirement.FINRA Rule 2210(b)(1)

Under FINRA's telemarketing rule, a representative may call a residential prospect with no existing relationship only between which times?

• a.8 a.m. and 9 p.m., local time at the called party's location✓
• b.7 a.m. and 10 p.m., local time at the called party's location
• c.8 a.m. and 9 p.m., local time at the representative's office
• d.9 a.m. and 5 p.m., local time at the representative's office

The permitted calling window is 8 a.m. to 9 p.m. in the time zone where the person being called is located. Using the representative's own time zone could put a call to a western prospect at an hour that violates the rule. A business-hours window is stricter than required, and extending to 7 a.m. or 10 p.m. exceeds the rule.FINRA Rule 3230

A customer bought a mutual fund through a representative 14 months ago and has not contacted the firm since. Why may the representative still make a telemarketing call to this person?

• a.The firm has an established business relationship, which lasts 18 months after a transaction✓
• b.The relationship ended 12 months after the purchase, but the call is exempt for existing clients
• c.The customer's number is on the do-not-call list, which does not bind a registered firm
• d.The calling window extends to midnight for people who have bought before

An established business relationship exists for 18 months after the customer's last transaction, so a call 14 months later is allowed, subject to calling hours and do-not-call requests. The do-not-call list does bind firms. The relationship does not expire at 12 months. Calling hours remain 8 a.m. to 9 p.m. for everyone.FINRA Rule 3230

How long must a member preserve its records of written customer complaints?

• a.At least four years✓
• b.At least six years
• c.At least two years
• d.At least three years

Rule 4513 requires complaint records for a minimum of four years, a period that was lengthened from three years to match FINRA's examination cycle. Two and three years are too short. Six years is the retention period for the account record under SEC Rule 17a-4, not for complaints.FINRA Rule 4513

A customer closes an account on June 1, 2026. At minimum, how long must the firm keep the account record information required by Rule 17a-3(a)(17)?

• a.Five years after the date the account was opened
• b.Three years after the account closes
• c.Six years after the account closes or the information is replaced✓
• d.Until the customer's next birthday after closing

The account record must be kept for at least six years after the earlier of the account closing or the information being replaced or updated. Three years is the general retention period for communications. Measuring from the opening date would let records be destroyed while the account is still active. Birthdays have nothing to do with retention.17 CFR 240.17a-4(e)(5)

A broker-dealer detects a transaction of $7,500 that it suspects involves illicit funds, and the suspect is known. By when must it file a Suspicious Activity Report?

• a.Within 15 calendar days, matching the currency transaction report
• b.Within 90 days, after the firm completes an internal review
• c.Within 30 calendar days after the facts that require filing are first detected✓
• d.Within 60 calendar days even though the suspect is known

A broker-dealer must file within 30 calendar days of initially detecting facts that may warrant a report, and the transaction here exceeds the $5,000 threshold. The 60-day period applies only when no suspect has been identified. Fifteen days is the deadline for a currency transaction report, which is a separate filing. A 90-day period for internal review would exceed the rule.31 CFR 1023.320