FINRA SIE — Securities Industry Essentials — All Questions

A registered representative leaves a broker-dealer. Within how many days must the firm file Form U5 to report the termination?

• a.Within 5 business days of the termination
• b.Within 60 days of the termination
• c.Within 30 days of the termination✓
• d.By the end of the next calendar quarter

FINRA By-Laws Article V, Section 3 requires the firm to file Form U5 no later than 30 days after the termination, and to give the individual a copy. The 5-business-day, 60-day, and next-quarter timeframes are not the filing deadline.FINRA By-Laws Article V, Section 3

A person passes the SIE. What else is required before being registered as a general securities representative?

• a.Nothing more, because the SIE alone qualifies the person to register
• b.Pass the Series 63 instead, which replaces a top-off exam
• c.Retake the SIE, since the result is valid for only one year
• d.Pass the Series 7 top-off exam while sponsored by a member firm✓

The SIE is a corequisite: registering as a general securities representative also requires the Series 7 top-off exam, which a member firm must sponsor. The SIE alone does not qualify anyone to register. The Series 63 is a state law exam, not a replacement for the top-off, and SIE results stay valid for four years, so no retake is needed within one year.FINRA Rule 1210

The SEC is directly responsible for all of the following EXCEPT:

• a.Overseeing FINRA and the national securities exchanges
• b.Bringing civil actions against securities-law violators
• c.Reviewing registration statements filed by issuers
• d.Licensing registered representatives and administering their exams✓

The SEC reviews registration statements, brings civil enforcement actions, and oversees the self-regulatory organizations, including FINRA and the exchanges. Registering and licensing representatives and administering the qualification exams, including the SIE, is done by FINRA, not by the SEC.Securities Exchange Act of 1934

Which kind of company does the Investment Company Act of 1940 generally require to register with the SEC as an investment company?

• a.A company mainly engaged in investing and trading in securities✓
• b.An investment adviser that manages individual client portfolios for fees
• c.An operating company that sells stock in an IPO to fund its factories
• d.A broker-dealer that carries and clears customer accounts

The 1940 Act applies to issuers that are, or hold themselves out as, primarily engaged in investing, reinvesting, or trading in securities, such as mutual funds and closed-end funds. A broker-dealer is regulated under the Securities Exchange Act of 1934, an investment adviser under the Investment Advisers Act of 1940, and an operating company registers its offering under the Securities Act of 1933 rather than registering as an investment company.Investment Company Act of 1940 Section 3(a)(1)

A firm learns that one of its registered representatives has been convicted of a felony that makes him statutorily disqualified. Under FINRA's By-Laws, how soon must the firm amend his Form U4 to report it?

• a.By year-end, at the annual compliance meeting
• b.Within 10 days after the firm learns of the facts✓
• c.Within 30 days, the same as any other U4 amendment
• d.Within 60 days, after its own review is finished

Article V, Section 2(c) of the FINRA By-Laws gives a firm 30 days after learning the facts to amend a Form U4, but an amendment that involves statutory disqualification must be filed within 10 days. The 30-day period is the general rule, not the one for disqualifying events. No rule lets a firm hold back a disqualification disclosure while it finishes its own review, and an annual meeting is not a filing deadline.FINRA By-Laws, Article V, Section 2(c)

A firm files a Form U5 on the 20th day after a representative resigns. What else must the firm do under FINRA's By-Laws?

• a.Wait for FINRA to accept the filing before sending the person anything
• b.Send a copy only if the person asks for one within 30 days
• c.Forward a copy to the person's next firm once it is identified
• d.Give the former representative a copy of the Form U5 when it files✓

Article V, Section 3 requires the firm to give the person a copy of the Form U5 at the same time it files the form, so the person can see what was reported and respond to it. Waiting for FINRA to accept the filing, or for a request, misses that same-time requirement. The firm has no duty to send the form to a later employer, which learns about the person's record through its own inquiries.FINRA By-Laws, Article V, Section 3

After a firm files a Form U5 ending a representative's registration, FINRA can still file a disciplinary complaint against the former representative for conduct during the registration. For how long?

• a.Two years after the effective date of termination✓
• b.Four years, matching how long an SIE result stays valid
• c.Five years, matching the longest MQP period
• d.One year after the effective date of termination

Under Article V, Section 4 of the By-Laws, FINRA retains jurisdiction over a former registered person if it files a complaint within two years after the effective date of termination of registration. One year is shorter than the By-Laws provide. Four years is how long an SIE result remains valid for someone who is no longer registered, and five years is the longest the MQP can preserve qualifications; neither sets the reach of FINRA's disciplinary authority.FINRA By-Laws, Article V, Section 4

Priya passed the SIE and the Series 7 in 2021 and was registered as a general securities representative until her firm filed a Form U5 on March 1, 2023. She did not join the MQP. A new firm wants to register her on October 1, 2025. What must she do?

• a.Pass both the SIE and the Series 7 again
• b.Only a new Form U4 and the Regulatory Element
• c.Pass the SIE again, but not the Series 7
• d.Pass the Series 7 again, but not the SIE✓

More than two years have passed since her registration ended (March 2023 to October 2025), so without the MQP she must pass the Series 7 again. The SIE stays valid for four years from the later of the date she passed it or the date she was last registered, here March 2023, so she need not retake it. Retaking only the SIE reverses the roles of the two exams. Skipping all exams treats the four-year SIE window as if it were the two-year representative window.FINRA Rule 1210.08

A general securities representative with three years of registration and no statutory disqualification leaves the industry and her firm files a Form U5 electing the MQP. How long can she stay in the program and still reregister without requalifying by exam?

• a.Up to five years after termination, if she completes her annual CE on time✓
• b.Up to ten years, as long as she is never statutorily disqualified
• c.Up to two years after termination, if she completes her annual CE on time
• d.Up to four years after termination, keeping her SIE result current

The MQP lets an eligible person, registered at least one year in the category with no statutory disqualification, keep qualifications for up to five years after termination by completing the assigned annual CE by December 31. Two years is the ordinary qualification period without the MQP. Four years is the SIE window, which the MQP does not change. Ten years is the look-back used for some disqualifying events, not an MQP limit.FINRA Rule 1240 (Maintaining Qualifications Program)

A broker-dealer's receptionist greets visitors and transfers calls. She does not sell securities, has no regular access to securities, cash or original books and records, and supervises nobody who does. Must she be fingerprinted under SEC Rule 17f-2?

• a.Yes, unless she works part-time, under twenty hours a week
• b.Yes, since every employee of a member firm must be fingerprinted
• c.No, her role and lack of access to valuables make her exempt✓
• d.No, but only after FINRA grants her a specific written waiver

Rule 17f-2 requires fingerprinting of employees of broker-dealers, with an exemption for an employee who is not engaged in the sale of securities, has no regular access to securities, money or original books and records, and has no supervisory responsibility over those who do. The receptionist fits the exemption on every point. The rule contains no blanket requirement for every employee, no waiver step through FINRA, and no part-time threshold.SEC Rule 17f-2

A client phones the desk and gives an unregistered sales assistant an order to buy 100 shares. The assistant enters it without waiting for the registered representative. What is wrong with this?

• a.Nothing, because order entry is ministerial work that an assistant may perform
• b.Nothing, since the supervising representative stays responsible for the account
• c.The order was proper, but it should have been confirmed in writing first
• d.Taking a customer order is not clerical work, so registration was required✓

Rule 1230 exempts from registration persons whose functions are solely clerical or ministerial, but accepting a customer order is not a clerical or ministerial act; it is a function that requires registration. Calling order entry ministerial misreads the exemption. A written confirmation does not cure the registration gap, and the representative's responsibility for the account does not allow an unregistered person to take orders.FINRA Rule 1230

A firm submits a new hire's Form U4 on June 10. Under Rule 3110(e), by what date must the firm verify the accuracy and completeness of the information in that Form U4?

• a.July 10, which is 30 days after submission✓
• b.June 20, which is 10 days after it is submitted
• c.August 9, which is 60 days after submission
• d.September 8, which is 90 days after submission

Rule 3110(e) requires a member to verify the information in a Form U4 within 30 days after the person submits it; June 10 plus 30 days is July 10. Ten days is the deadline for amending a U4 for a disqualifying event, not for verifying one. Sixty and ninety days are not periods the rule sets for this task.FINRA Rule 3110(e)

A representative holds only the SIE and the Series 6. A client asks her to buy 200 shares of a listed stock. Why can she not take the order?

• a.Her registration covers fund and variable products, not individual stocks✓
• b.She can take it once the client signs a one-time written risk waiver
• c.She can take it if a Series 7 principal approves each ticket in advance
• d.The SIE covers stock transactions, but she still needs a state registration

The Series 6 qualifies a person as an Investment Company and Variable Contracts Products Representative, so her activity is limited to mutual funds, variable annuities, variable life and similar products. Individual stocks require a broader registration such as the General Securities Representative. The SIE is only an entry-level exam and does not authorize any business. Neither principal approval nor a client waiver can extend a registration beyond its scope.FINRA Rule 1220

On April 3, a representative tells compliance that he filed a personal bankruptcy petition. The event does not make him statutorily disqualified. By what date must the firm amend his Form U4?

• a.No amendment, since a personal bankruptcy is a private matter
• b.May 3, which is 30 days after the firm learned of it✓
• c.April 13, which is 10 days after the firm learned of it
• d.June 2, which is 60 days after the firm learned of it

A personal bankruptcy petition is a disclosable event on Form U4, and the By-Laws require an amendment within 30 days after the firm learns the facts, here May 3. The 10-day deadline is reserved for amendments involving statutory disqualification, which this event is not. Sixty days has no place in the amendment rule. The claim that nothing must be filed is wrong because the Form U4 asks about personal bankruptcies regardless of the connection to the securities business.FINRA By-Laws, Article V, Section 2(c)

Marcus advises corporate issuers on mergers and helps arrange their debt and equity offerings. He does not trade or handle retail accounts. He wants the narrowest representative registration that covers this work. Which should he choose?

• a.Securities Trader Representative (Series 57)
• b.Investment Banking Representative (Series 79)✓
• c.Series 6 representative for funds and variable products
• d.General Securities Representative (Series 7)

The Series 79 qualifies the Investment Banking Representative, a limited registration for advising on or facilitating offerings, mergers, acquisitions and restructurings. The Series 7 would also permit this work but adds retail brokerage he does not do, so it is not the narrowest. The Series 57 is for proprietary trading, and the Series 6 covers mutual funds and variable products, which are not corporate advisory work.FINRA Rule 1220

A trader at a firm spends the day buying and selling equity and preferred securities for the firm's own account away from an exchange. She has no customers. She wants the narrowest registration that covers this activity. Which should she hold?

• a.Private Securities Offerings Representative (Series 82)
• b.General Securities Representative (Series 7)
• c.Securities Trader Representative (Series 57)✓
• d.Investment Banking Representative (Series 79)

The Series 57 qualifies the Securities Trader, a limited registration for proprietary trading of equity, preferred and convertible debt securities away from an exchange. The Series 79 covers advisory and offering work, and the Series 82 covers selling private placements, so neither matches trading the firm's capital. The Series 7 would also qualify her but includes retail brokerage activity she does not perform.FINRA Rule 1220

A person will sell only interests in real estate and oil-and-gas limited partnerships, which are direct participation programs. Which limited representative exam is designed for that role?

• a.Series 22, Direct Participation Programs Limited Representative✓
• b.Series 6, Investment Company and Variable Contracts Products Representative
• c.Series 57, Securities Trader Representative, for proprietary trading
• d.Series 79, Investment Banking Representative, for advisory work

The Series 22 qualifies the Direct Participation Programs Limited Representative, whose activity is limited to interests in partnerships and similar pass-through programs. The Series 6 covers mutual funds and variable products, the Series 79 covers corporate advisory and offering work, and the Series 57 covers proprietary trading; none of them is built for selling partnership interests.FINRA Rule 1220

Elena holds the SIE and the Series 6 and has just been promoted to supervise her firm's mutual fund sales staff. She wants a principal registration for that supervision. Which is available to her without first adding a Series 7?

• a.Series 26, since the SIE and Series 6 meet its prerequisite✓
• b.Series 9/10, since they cover supervision of fund sales
• c.No principal exam, because principals must hold the Series 7 first
• d.Series 26, but only after she also passes the Series 7

The Series 26 qualifies the Investment Company and Variable Contracts Products Principal, and its prerequisite is the SIE plus either the Series 6 or the Series 7, so Elena already qualifies to sit for it. The Series 9/10 are general securities sales supervisor exams that require the Series 7. Saying principals must first hold the Series 7 describes the general securities track, not the limited one.FINRA Rule 1220 and registration co-requisites

Tomas passed the SIE and the Series 7 in January 2020 and was registered as a general securities representative until a Form U5 was filed on March 15, 2024. He did not join the MQP. A new firm registers him on September 1, 2025. Which exam must he retake?

• a.The SIE only, because he passed it more than four years ago
• b.The Series 7 only, because the SIE result never expires
• c.Neither; he was registered within the past two years✓
• d.Both, because he passed the SIE more than four years ago

His registration ended about 17 months before the new registration, which is under the two-year period, so he need not requalify by exam on the Series 7. The four-year SIE clock runs from the later of the date he passed it or the date he was last registered, here March 2024, so the SIE is also still valid. Counting four years from January 2020 ignores his later registration, and an SIE result does expire if a person stays out for four years.FINRA Rule 1210.08

Dana passed the SIE and the Series 24 and her firm wants to register her as a General Securities Principal. She has never held another registration. What else must she have?

• a.A General Securities Representative registration, obtainable at the same time✓
• b.A Series 9 registration, the usual companion exam to the Series 24
• c.Nothing more, since the SIE and Series 24 are enough on their own
• d.A Series 6 registration, which meets the representative-level need

A General Securities Principal must also be registered as a General Securities Representative, which means passing the Series 7; it can be held before or at the same time as the principal registration. The Series 6 is a limited registration and does not fill the general securities requirement. The SIE and Series 24 alone leave out the representative-level exam, and the Series 9 is a sales supervisor exam, not a prerequisite.FINRA Rule 1220 and registration co-requisites

A representative will sell only securities offered in private placements under Regulation D, with no public offerings and no retail brokerage. Which limited registration fits that role?

• a.Series 6 representative for mutual funds and variable products
• b.Private Securities Offerings Representative (Series 82)✓
• c.Direct Participation Programs Representative (Series 22)
• d.Securities Trader Limited Representative (Series 57)

The Series 82 qualifies the Private Securities Offerings Representative, a limited registration for selling securities offered in private placements. The Series 22 is for partnership interests, the Series 57 for proprietary trading, and the Series 6 for mutual funds and variable products, so none of them matches a role limited to private placements.FINRA Rule 1220

A representative misses her Regulatory Element deadline and her registration becomes CE inactive. She never completes the session, and two consecutive years pass. What happens to her registration?

• a.It stays inactive until she completes the session, however long that takes
• b.FINRA administratively terminates it, and she must requalify by exam to reregister✓
• c.FINRA suspends it for 120 days, then reinstates it after Firm Element training
• d.Her firm may keep it active by assigning extra Firm Element training

Under Rule 1240(a), a registration that remains CE inactive for two consecutive years is administratively terminated, and the person must requalify by exam to be registered again. Remaining inactive indefinitely is not an option under the rule. The 120-day period applies to continuing education assigned in disciplinary matters, and Firm Element training cannot substitute for the Regulatory Element.FINRA Rule 1240(a)

A firm has an employee whose only registration is a permissive one that his job does not require. Under the current continuing education rules, how does the Firm Element apply to him?

• a.He needs it only in a year when he fails the Regulatory Element
• b.He is excluded, because a permissive registration does not trigger it
• c.He must complete it every third year instead of every year
• d.The firm must include him in its annual Firm Element training✓

Since January 1, 2023, the annual Firm Element applies to all registered persons, including those who hold only a permissive registration under Rule 1210.02. The firm may tailor the training to his role and may count AML program training or the annual compliance meeting toward it. The Firm Element does not depend on the Regulatory Element result, and it is annual, not a three-year cycle.FINRA Rule 1240(b)

A representative has an unsatisfied CE deficiency in her existing registration category. She asks her current firm and a competitor to register her in an additional category. What is the effect of the deficiency?

• a.She can register with either firm, after a 120-day waiting period
• b.She is barred from adding any registration, at either firm, until it is cleared✓
• c.It affects her existing category only and does not block new ones
• d.She can register in the new category with her firm, but not with the competitor

Rule 1210.07 bars a person with an outstanding CE deficiency from registering in an additional category with the same member, and from registering in any category with another member, until the deficiency is satisfied. Allowing the move with her own firm or after a waiting period contradicts that bar, and the idea that new registrations are unaffected ignores it entirely.FINRA Rule 1210.07

FINRA suspends a registered representative for 30 days. During the suspension, her firm

• a.may not pay or credit remuneration accruing during the suspension✓
• b.may pay her base salary in full, since only commissions are barred
• c.may keep her on salary if she works only in a clerical capacity
• d.may let her service existing clients by phone, without soliciting new ones

Rule 8311 bars a member from allowing a suspended person to associate with it in a way inconsistent with the suspension, and bars the firm from paying or crediting remuneration that accrues during the suspension. A clerical role is still association, so it does not help. Servicing clients by phone is inconsistent with the suspension, and salary is remuneration just as commissions are.FINRA Rule 8311

A customer with no written arbitration agreement files a claim in FINRA arbitration against a member firm over a dispute about her brokerage account. The firm objects. What is the result?

• a.The firm may refuse, because no written agreement exists
• b.The firm must arbitrate, because the customer requested arbitration✓
• c.The firm must arbitrate only if the representative consents
• d.The firm must arbitrate only if a court first orders it

Under Rule 12200, a member must arbitrate a dispute with a customer, arising in connection with its business, if the customer requests it or a written agreement requires it. The customer's request alone is enough, so a missing agreement is no defense. The representative's personal consent and a court order are not conditions in the rule.FINRA Rule 12200

Maria pleaded guilty eight years ago to a misdemeanor charge of embezzlement and received probation. She now seeks a securities industry job. Is she statutorily disqualified?

• a.No, because a misdemeanor with no jail sentence cannot disqualify her
• b.No, because the conviction is more than five years in the past
• c.Yes, since a misdemeanor embezzlement within ten years disqualifies✓
• d.No, because only felony convictions can cause a statutory disqualification

Under Section 3(a)(39) of the Exchange Act, a misdemeanor within the past ten years is a disqualifying event if it involves securities, theft, embezzlement, forgery or similar offenses, so her eight-year-old conviction counts. Felonies are not the only convictions that disqualify. Whether she served jail time does not matter, and the look-back period is ten years, not five.Securities Exchange Act of 1934, Section 3(a)(39)

On May 12, a firm receives a written complaint from a customer who says a registered representative stole $4,000 from her account. By when must the firm report the complaint to FINRA under Rule 4530?

• a.By May 22, which is 10 calendar days after receipt
• b.Only on its quarterly report, because $4,000 is below $15,000
• c.By August 11, which is 90 calendar days after receipt
• d.By June 11, which is 30 calendar days after receipt✓

Rule 4530(a)(1)(B) requires a report within 30 calendar days after the firm knows or should have known of a written customer complaint alleging theft, misappropriation or forgery. May 12 plus 30 calendar days is June 11. The $15,000 figure is a litigation and arbitration threshold and does not apply to theft complaints, which are reportable whatever the amount. Ninety days and ten days are not periods the rule uses.FINRA Rule 4530(a)(1)(B)

On August 12, a firm receives a written complaint from a customer who says a recommended stock was unsuitable for her. No theft or forgery is alleged. When is the complaint reported to FINRA under Rule 4530?

• a.As a separate report within 30 days, by September 11
• b.It is not reportable, because no theft was alleged
• c.In the quarterly statistical report due October 15✓
• d.In the fourth-quarter statistical report due January 15

Rule 4530(d) has firms report statistical and summary information on written customer complaints within 15 days after the end of each calendar quarter. August falls in the third quarter, which ends September 30, so the report is due October 15. The 30-day individual report is for complaints alleging theft, misappropriation or forgery. The January report covers the fourth quarter, not this one. A complaint without a theft allegation is not exempt, since it is reported in the summary form instead.FINRA Rule 4530(d)

A firm fines a registered representative exactly $2,500 for breaking its written policies and withholds none of his commissions. Is this internal discipline reportable to FINRA under Rule 4530?

• a.Yes, because every fine goes in the quarterly report
• b.Yes, because a fine of $2,500 or more must be reported
• c.No, because internal discipline is never reportable
• d.No, because the fine does not exceed the $2,500 limit✓

Rule 4530(a)(2) requires a report when a firm disciplines an associated person with a suspension, termination, withholding of more than $2,500 in compensation, a fine of more than $2,500, or another measure that significantly limits the person's activities. A fine of exactly $2,500 is not more than $2,500, so by itself it does not trigger the report. The threshold is more than, not at least. Internal discipline above the threshold is reportable, so it is wrong to say it never is, and the quarterly report summarizes customer complaints rather than disciplinary events.FINRA Rule 4530(a)(2)

A customer files an arbitration claim against a registered representative personally, and the case settles for $20,000. The firm is not named. Is the settlement reportable under Rule 4530?

• a.No, because only arbitration awards are reportable, not settlements
• b.Yes, but only if the representative admits wrongdoing in it
• c.No, because the reporting threshold is $25,000 for every settlement
• d.Yes, because it exceeds the $15,000 threshold for an associated person✓

Rule 4530(a)(1)(G) requires a report when an associated person is a defendant or respondent in securities-related litigation or arbitration that ends by judgment, award or settlement for more than $15,000. The $25,000 figure applies when the member itself is the defendant or respondent, and here the firm is not named. Settlements count along with judgments and awards, and the rule does not require any admission of wrongdoing.FINRA Rule 4530(a)(1)(G)

On March 3, a firm's emails show that a representative clearly broke a securities rule, and the firm should have recognized it then, but it does nothing until its annual review ends on June 20. When did the 30-calendar-day reporting period under Rule 4530(b) begin?

• a.June 20, the day the firm's annual compliance review ended
• b.The day a regulator first asks the firm about the conduct
• c.April 1, the first day of the quarter after the conduct
• d.March 3, when it should have concluded a violation occurred✓

Rule 4530(b) requires a report promptly, and no later than 30 calendar days after the firm has concluded or reasonably should have concluded that a violation occurred. The period runs from the date the firm should have recognized the violation, so putting off its own review does not move the deadline. The end of the annual review, a regulator's inquiry and the start of the next quarter are all later points the rule does not use.FINRA Rule 4530(b)

A firm's branch is supervised from an office of supervisory jurisdiction (OSJ), and the branch receives a written customer complaint. Where must the firm keep a record of the complaint, and for how long?

• a.At the branch itself only, for at least two years
• b.At the main office only, for at least six years
• c.At the OSJ, until the complaint has been resolved
• d.In the OSJ's complaint file, for at least four years✓

Rule 4513 requires a firm to keep, at each OSJ, a file or record of written customer complaints relating to that office, including activities it supervises, and to preserve it for at least four years. The branch alone is not the required location, since the OSJ supervises it. Six years is the period for some other firm records, not complaints. A record cannot be discarded when the complaint is resolved, because the four-year period applies either way.FINRA Rule 4513

A customer tells a firm's compliance officer by phone that a representative stole money from her account, but she never puts the accusation in writing. Does the call alone trigger a Rule 4530(a)(1)(B) report?

• a.No, because that provision covers only written customer complaints✓
• b.Yes, within 30 days, because a theft claim is always reportable
• c.No, because the customer never stated how much was taken
• d.Yes, but only in the quarterly statistical report that follows

A written customer complaint involving allegations of theft, misappropriation or forgery is what triggers Rule 4530(a)(1)(B). An oral accusation does not meet that definition, although the firm should still investigate it and may have to report later if it concludes a violation occurred. A theft claim is not reportable in every form, and the quarterly report summarizes written complaints, so it would not capture a phone call. The amount alleged has no bearing on the writing requirement.FINRA Rule 4530(a)(1)(B)

On November 3, a firm learns that one of its registered representatives has been indicted on a felony charge. By what date must the firm report this under Rule 4530?

• a.Not required, because only a conviction is reportable
• b.December 3, 30 calendar days after the firm learns of it✓
• c.January 15, in the next quarterly statistical report
• d.December 13, 40 calendar days after the firm learns of it

Rule 4530(a)(1) requires a report within 30 calendar days after the firm knows or should have known that an associated person has been indicted for, convicted of, or pleaded guilty or no contest to a felony. November 3 plus 30 calendar days is December 3. An indictment alone is enough, so waiting for a conviction would miss the deadline. Forty days is not a period the rule uses, and the quarterly statistical report covers written customer complaints, not criminal events.FINRA Rule 4530(a)(1)

A municipal finance professional (MFP) of a dealer is entitled to vote in the district and gives $200 to a candidate for state treasurer in the primary and $200 to the same candidate in the general election. The office can influence the selection of dealers. Does MSRB Rule G-37 impose its two-year ban on the dealer?

• a.Yes, because the two gifts total $400, which is more than $250
• b.No, because each election has its own $250 de minimis limit✓
• c.No, because primary contributions are never covered by the rule
• d.Yes, because any contribution to such an official triggers the ban

Rule G-37 lets an MFP who is entitled to vote contribute up to $250 per election to an official without triggering the two-year ban, and the primary and the general election are separate elections. Each $200 gift is within its own limit, so no ban follows. The $400 total is not the test, because the limit does not add up across elections. The ban does follow contributions above the de minimis amount, but these are not above it, and primary contributions are covered by the rule rather than exempt from it.MSRB Rule G-37(b)

A covered associate of an investment adviser cannot vote for a candidate for state treasurer and contributes $200 to the campaign. The office can influence the hiring of advisers. What follows under SEC Rule 206(4)-5?

• a.Nothing, because the limit is $350 for every covered associate
• b.A two-year ban on pay for advising that government entity✓
• c.Nothing, because the rule reaches only the adviser's own gifts
• d.A permanent bar on the adviser managing any public pension money

Rule 206(4)-5 lets a covered associate contribute up to $350 per election to a candidate the associate may vote for, and up to $150 if the associate cannot vote for the candidate. A $200 gift from someone who cannot vote is over the $150 limit, so the adviser may not receive compensation for advisory services to that government entity for two years. The $350 figure does not apply to non-voters. The consequence is a two-year time-out, not a permanent bar, and contributions by covered associates count along with the adviser's own.SEC Rule 206(4)-5(b)(1)

A dealer's MFP who is not entitled to vote gave $200 to an official on February 1. The dealer discovers the contribution on May 15, within four months of the gift. By what date must it be returned for the automatic exemption from the two-year ban to apply?

• a.July 14, 60 calendar days after discovery✓
• b.June 14, 30 calendar days after discovery
• c.August 13, 90 calendar days after discovery
• d.June 1, four months after the contribution

The automatic exemption in Rule G-37 covers a contribution of $250 or less that the dealer discovers within four months of the date it was made, provided the contribution is returned within 60 calendar days after discovery. The dealer found it on May 15, within four months of February 1, so the return deadline is 60 calendar days after May 15, which is July 14. June 14 counts only 30 days and August 13 counts 90. June 1 is the end of the four-month discovery window, not the return deadline.MSRB Rule G-37(j)

A dealer's MFP organizes a fundraiser for a mayoral candidate who can influence the choice of dealers. Friends write $150 checks to the campaign, and the MFP contributes nothing personally. Is this permitted under MSRB Rule G-37?

• a.No, and the dealer is automatically banned for two years
• b.Yes, because the MFP did not personally contribute anything
• c.No, because soliciting contributions is barred by G-37(c)✓
• d.Yes, because each check is within the $250 de minimis amount

Rule G-37(c) prohibits a dealer and its MFPs from soliciting or coordinating contributions to an official of an issuer with which the dealer does or seeks to do municipal securities business, and the $250 de minimis exception covers only an MFP's own contributions, not solicited ones. Whether the MFP gave personally is therefore not the test, and small checks do not cure the violation. The conduct breaches the rule, but a solicitation violation does not by itself trigger the two-year ban, which attaches to contributions made by the dealer or its MFPs above the de minimis amount.MSRB Rule G-37(c)

In the same year, a firm's registered representative gives a client's purchasing manager a $180 gift in March, and the firm's trader gives the same manager a $150 gift in June. Do the gifts violate FINRA Rule 3220?

• a.No, because each gift is under $300 when taken alone
• b.No, because the rule restricts only gifts made in cash
• c.No, because the limit applies to each giver separately
• d.Yes, because they total $330, over the $300 limit✓

Rule 3220 caps gifts at $300 per individual per year, and Supplementary Material .03 treats the firm and all its associated persons together for that cap. The $180 and $150 gifts, given to the same person in the same year, total $330, which is more than $300. Looking at each gift alone, or at each giver separately, misses the aggregation. The rule is not limited to cash, since it covers anything of value.FINRA Rule 3220.03

A firm pays $220 for two ball-game tickets whose face value is $320, and a representative gives them to a client's employee without attending the game. Do the tickets exceed the Rule 3220 limit?

• a.No, because the firm's actual cost was only $220
• b.No, because tickets are entertainment and outside the rule
• c.Yes, because gifts of tickets are always prohibited
• d.Yes, because they count at the higher face value of $320✓

Under Supplementary Material .02, a gift of tickets is valued at the higher of cost or face value when the giver does not attend with the recipient. The face value of $320 is more than $300, so the gift exceeds the limit even though the firm paid only $220. Tickets given away without the giver attending are gifts, not entertainment, so the rule applies. The rule does not prohibit ticket gifts outright, since it limits their value.FINRA Rule 3220.02

A firm gives a $500 holiday gift to a retail customer who holds an account at the firm. Does the $300 limit in FINRA Rule 3220 prohibit it?

• a.No, because the rule excludes the firm's own retail customers✓
• b.Yes, unless the firm records it as a business expense and discloses it
• c.Yes, because any gift over $300 in a year is prohibited by the rule
• d.No, but only because the gift is below a $1,000 threshold in the rule

Supplementary Material .09 says Rule 3220 does not apply to gifts a firm gives to its own retail customers, so the $500 holiday gift is outside the limit. The rule targets gifts to the employees and representatives of other businesses, where the influence concern arises. The $300 cap therefore does not decide this case, and recording the gift as an expense does not create a requirement under the rule. The rule has no $1,000 threshold.FINRA Rule 3220.09

A representative gives a client's employee a $450 wedding gift, and the firm reimburses her for it. Does the personal-occasion exclusion in Rule 3220 apply?

• a.Yes, because a wedding is a personal event, so it is always excluded
• b.No, because personal gifts are never excluded from the limit
• c.Yes, because gifts below $500 are excluded for life events
• d.No, because the firm paid, so it is presumed business-related✓

Supplementary Material .04 excludes gifts for infrequent personal life events such as a wedding, but when the member bears the cost, FINRA presumes the gift is business-related. Because the firm reimbursed the representative, the gift is presumed business-related and the $300 limit applies, so $450 is over it. A wedding is not automatically excluded. The rule contains no $500 exception, and saying personal gifts are never excluded ignores the exclusion that applies when the giver pays personally.FINRA Rule 3220.04

A fund sponsor tells representatives at several broker-dealers it will fly them to a resort if they sell $1 million of its fund shares. Does FINRA's non-cash compensation rule allow this?

• a.Yes, because the sponsor pays rather than the reps' firms
• b.No, because it is tied to reaching a sales target✓
• c.Yes, provided the reps' firms tell customers about it
• d.Yes, if each trip is worth no more than $300 apiece

FINRA Rule 2341 permits non-cash compensation only in limited forms, such as gifts of $300 or less per individual per year that are not preconditioned on sales. A trip awarded only for selling $1 million of fund shares is conditioned on a sales target, so it falls outside what the rule permits. It is not cured by the sponsor paying in place of the firms, by a small per-trip value, or by telling customers about it.FINRA Rule 2341

Before or at the time of a recommendation to a retail customer, which item must a broker-dealer disclose in writing under Regulation Best Interest's Disclosure Obligation?

• a.The personal tax returns of the associated person making the recommendation, filed each year
• b.The material fees and costs that apply to the customer's transactions, holdings and accounts✓
• c.The firm's complete list of every other customer who holds the recommended security today
• d.A guarantee that the recommended investment will not lose value over the holding period

Under the Disclosure Obligation, a broker-dealer must provide in writing full and fair disclosure of all material facts about the scope and terms of the relationship, including that it is acting as a broker-dealer, the material fees and costs, and the type and scope of services and any limits on what it may recommend, plus material conflicts of interest. Neither a personal tax return nor a guarantee of results is part of the required disclosure.SEC Regulation Best Interest, 17 CFR 240.15l-1(a)(2)(i)

Under FINRA Rule 4370, which statement about a member's written business continuity plan (BCP) is correct?

• a.The firm must review it at least annually and update it after any material change to its operations, structure, business or location✓
• b.The firm needs to review it only when FINRA examines the firm and asks to see it
• c.The firm must file the plan with the SEC each year, and it may not be shown to FINRA staff
• d.The firm may leave out any category the rule lists without documenting its reasons

FINRA Rule 4370 requires a written BCP, an update after any material change in operations, structure, business or location, and an annual review to decide whether modifications are needed. The plan must be available promptly to FINRA staff on request, and a member that leaves out a listed category as not applicable must document why. A senior manager must approve the plan.FINRA Rule 4370

Under the SAR rule for broker-dealers, a transaction requires reporting only if it involves or aggregates at least what amount, and the firm knows, suspects or has reason to suspect that it is suspicious?

• a.$3,000
• b.$5,000✓
• c.$10,000
• d.$25,000

Under 31 CFR 1023.320, a broker-dealer must file a SAR on a transaction conducted or attempted by, at, or through it that involves or aggregates funds or other assets of at least $5,000, where it knows, suspects, or has reason to suspect that the transaction falls into one of the listed suspicious categories. The $10,000 figure belongs to the currency transaction report.31 CFR 1023.320(a)(2)

A traveler carries $12,000 in cash and traveler's checks from a trip abroad into the United States. What does the Bank Secrecy Act require?

• a.Nothing, because only amounts above $25,000 are reportable
• b.A report only if the money came from a foreign bank
• c.He must file a report only if he deposits the money within 24 hours
• d.He must file a report of the transportation, because the currency and monetary instruments exceed $10,000✓

31 CFR 1010.340(a) requires a report from each person who physically transports, mails or ships currency or other monetary instruments in an aggregate amount exceeding $10,000 at one time into or out of the United States. The reporting threshold applies to the total, not to each item.31 CFR 1010.340(a)

A company will act on a matter by written consent of holders of a majority of its voting shares, without a proxy solicitation. How far in advance must it send shareholders an information statement before the action may be taken?

• a.At least 5 business days before the action, and only if the holders ask for a statement
• b.At least 10 business days after the action is taken, as a notice to the holders of record
• c.At least 60 calendar days before the action, in every case without any exception at all
• d.At least 20 calendar days before the earliest date the action may be taken✓

Rule 14c-2 requires that an information statement be sent at least 20 calendar days before the meeting date or, where holders act by consent, at least 20 calendar days before the earliest date on which the corporate action may be taken. It is a disclosure document, not a request for the holder's vote.17 CFR 240.14c-2(b)

A customer gives a firm a separate written authorization to issue checks drawn on her bank account. How long must the firm keep that authorization under FINRA Rule 4514?

• a.Six years after the first check is issued
• b.One year after the authorization was first given to the firm
• c.Until the last check drawn under the authorization clears the bank
• d.Three years after the authorization expires✓

FINRA Rule 4514 requires express written authorization before a member draws negotiable paper on a customer's checking, savings or similar account; the customer's signature on the instrument itself can serve. Where the authorization is a separate document, the member must preserve it for three years after the authorization expires. The general six-year period applies only to records with no specified period.FINRA Rule 4514