FINRA SIE — Securities Industry Essentials — All Questions

A registration statement for an IPO omitted a material liability. Investors sue the underwriters under Section 11. Which fact would support an underwriter's due diligence defense?

• a.Its staff relied on written assurances from the issuer's senior management
• b.It made a reasonable investigation and believed the statements true✓
• c.The omitted liability was the issuer's responsibility, not the underwriter's
• d.The SEC reviewed the filing and allowed it to become effective

Section 11(b)(3) gives an underwriter a defense if, after reasonable investigation, it had reasonable ground to believe, and did believe, that the statements were true when the statement became effective. SEC effectiveness is not a finding of accuracy and is no defense. Relying only on management's assurances is not a reasonable investigation. Underwriters are among the persons Section 11(a) lets investors sue, so saying the statements were the issuer's does not remove liability.Securities Act Section 11(b)(3)

A company that was not an SEC reporting company completes its IPO, and its shares are listed on a national exchange as of the offering date. For how long must a dealer that is not part of the distribution deliver a prospectus on aftermarket sales?

• a.10 business days after the first trade
• b.90 days after the effective date
• c.25 calendar days after offering✓
• d.40 days after the effective date

Section 4(a)(3) sets 90 days for a first-time issuer, but Rule 174(d) shortens it to 25 calendar days after the offering date when the issuer was not reporting and the security is listed on an exchange or quoted on an interdealer system run by a registered securities association when the offering starts. The 40-day period applies to issuers with earlier registered securities and the 90-day period remains the statutory default. No 10-business-day period exists.Securities Act Rule 174(d)

After a registration statement is effective, a broker-dealer wants to send trade confirmations for the new issue without attaching the final prospectus. Under Rule 172, which condition must be met?

• a.The shares trade at or below the offering price in early trading
• b.The issuer is an SEC reporting company, which exempts it from Section 5
• c.The final prospectus has been or will timely be filed with the SEC✓
• d.Each customer signs a waiver of the right to receive the final prospectus

Rule 172 treats delivery of the final prospectus as satisfied for confirmations if the registration statement is effective with no pending stop-order proceeding, and the issuer has filed the final prospectus with the SEC or will do so within the Rule 424 deadline. Customers cannot waive the delivery requirement. Trading price is irrelevant. Being a reporting company does not exempt a registered offering from Section 5.Securities Act Rule 172(c)

A seasoned company's Form S-3 shelf registration statement became effective on March 1, 2026. With no new registration statement filed, what is the latest date it may keep selling securities under that shelf?

• a.March 1, 2031, five years after effectiveness
• b.March 1, 2029, three years after effectiveness✓
• c.March 1, 2028, two years after effectiveness
• d.March 1, 2027, one year after effectiveness

Rule 415(a)(5) allows securities registered on Form S-3 for delayed or continuous sale to be offered only until three years after the initial effective date of the registration statement, which is March 1, 2029. The one-year and two-year dates cut the window short, and five years exceeds it. A new registration statement filed before the deadline would allow continued sales under the rule's transition provisions.Securities Act Rule 415(a)(5)

A broker-dealer sold an IPO's shares to a customer before the registration statement became effective. The customer now wants her money back. What remedy does the Securities Act give her?

• a.No private remedy, because only the SEC can enforce Section 5
• b.Rescission: the price paid plus interest, less income✓
• c.Recovery only if she proves the seller intended to defraud her
• d.Damages limited to the commission she paid the broker-dealer

Section 12(a)(1) lets a purchaser sue the seller of a security sold in violation of Section 5 to recover the consideration paid with interest, less income received, on tendering the security, or damages if she no longer owns it. The remedy is not capped at the commission. Section 12 creates a private right of action. Proof of fraudulent intent is not required, so the violation alone is enough.Securities Act Section 12(a)(1)

An IPO's shares were first bona fide offered to the public on April 6, 2025. A buyer learns of a material misstatement in the registration statement on February 2, 2028. What is the last day to bring a Section 11 action?

• a.February 2, 2031, three years after discovery
• b.February 2, 2029, one year after discovery
• c.April 6, 2026, one year after the offering
• d.April 6, 2028, three years after offering✓

Section 13 requires a Section 11 action within one year after discovery of the misstatement, but never more than three years after the security was first bona fide offered to the public. One year from discovery would be February 2, 2029, but the three-year outer limit ends first, on April 6, 2028. The other dates apply the one-year or three-year periods from the wrong starting event.Securities Act Section 13

An investor who is not an affiliate bought restricted stock directly from an issuer that has filed all required SEC reports for years. She has held the shares seven months. Can she resell them under Rule 144?

• a.No, because a one-year holding period applies to every non-affiliate
• b.Yes, but only after filing Form 144 and waiting 90 days
• c.No, because she must also stay within the 1% volume limit
• d.Yes, because six months have passed and the issuer is current✓

For a reporting issuer, a non-affiliate must hold restricted securities six months. Between six months and one year she also needs the issuer to have adequate current public information, which this issuer has. After one year even that condition falls away. The one-year period applies to non-reporting issuers. Volume limits and the Form 144 notice apply to affiliates, not to a non-affiliate, and there is no 90-day wait after filing.Securities Act Rule 144(b)(1)

An affiliate of an exchange-listed company has 8,000,000 shares outstanding. The four-week average weekly trading volume is 95,000 shares, and the affiliate sold 20,000 shares under Rule 144 two months ago. How many more shares can the affiliate sell now under Rule 144?

• a.115,000 shares
• b.75,000 shares✓
• c.60,000 shares
• d.95,000 shares

Rule 144(e) caps sales by an affiliate in any three-month period at the greatest of 1% of the class outstanding or the average weekly volume over the four preceding weeks. 1% of 8,000,000 is 80,000 and average weekly volume is 95,000, so the cap is 95,000. The earlier 20,000-share sale falls within three months, so 95,000 - 20,000 = 75,000 remain. Using 95,000 ignores the prior sale. Using 1% gives 60,000. Adding the prior sale gives 115,000.Securities Act Rule 144(e)(1)

An affiliate of an SEC reporting company plans to sell 4,000 restricted shares at $20 each under Rule 144, with no other sales in the past three months. Must a Form 144 notice be filed?

• a.Yes, because the $80,000 sale price exceeds $50,000✓
• b.No, because 4,000 shares is fewer than 5,000 shares
• c.Yes, but only after the sale has fully settled
• d.No, because Form 144 applies only to non-affiliates

An affiliate must file Form 144 if the securities sold in any three-month period exceed 5,000 shares or have an aggregate sale price above $50,000. Either test triggers the filing, and 4,000 x $20 = $80,000 is over the dollar limit even though the share count is under. The filing is made concurrently with placing the sell order, not after settlement, and it is an affiliate requirement.Securities Act Rule 144(h)

Which individual is an accredited investor under Rule 501(a) based on net worth or income?

• a.A single person with a $1.2 million net worth, of which $700,000 is home equity
• b.A married couple with joint income of $280,000 in each of the past two years
• c.A single person who earned $250,000 last year and $150,000 the year before
• d.A single person with $1.2 million net worth, excluding her primary home✓

Rule 501(a) counts a natural person whose net worth, alone or with a spouse, exceeds $1 million, excluding the primary residence. The second person has only $500,000 once home equity is removed. Income qualifies only if it exceeded $200,000 individually, or $300,000 jointly, in each of the two most recent years with the same level expected this year, so $150,000 in one year and $280,000 joint both fall short.Securities Act Rule 501(a)

Which offering can qualify for the Rule 506(b) safe harbor?

• a.Sales to accredited and 10 non-accredited investors who lack financial knowledge and have no representative
• b.Sales to 36 non-accredited investors, all financially sophisticated, within 90 days
• c.Sales to accredited investors recruited through social media ads, verified by a checkbox
• d.Sales to 40 accredited and 30 sophisticated non-accredited investors found through existing contacts✓

Rule 506(b) allows unlimited accredited investors and up to 35 non-accredited purchasers in any 90-day period, each of whom must be financially sophisticated, alone or with a purchaser representative, and it prohibits general solicitation. The first offering meets every test. 36 non-accredited purchasers exceed the limit. Social media ads are general solicitation, which only Rule 506(c) allows with verification. Unsophisticated non-accredited buyers do not qualify.Securities Act Rule 506(b)

A non-accredited investor has annual income of $90,000 and a net worth of $400,000. Over 12 months, what is the most she may invest across all Regulation Crowdfunding offerings?

• a.$4,500
• b.$9,000
• c.$20,000✓
• d.$40,000

When either annual income or net worth is below $124,000, the limit is the greater of $2,500 or 5% of the greater of income or net worth. Her income is below $124,000, so 5% of the greater figure, $400,000, gives $20,000. Taking 10% of net worth gives $40,000, which applies only when both figures are at least $124,000. Using only income gives $4,500 at 5% or $9,000 at 10%, but the rule uses the greater of the two figures.Regulation Crowdfunding Rule 100(a)(2)

A private company wants to raise $50 million within 12 months from the general public, including non-accredited investors, through an offering statement the SEC qualifies rather than registers. Which exemption fits?

• a.Regulation A, Tier 1
• b.Regulation Crowdfunding
• c.Regulation A, Tier 2✓
• d.Rule 504 of Regulation D

Regulation A lets issuers make public offers qualified by the SEC without a full registration. Tier 2 permits up to $75 million in 12 months, so $50 million fits. Tier 1 is capped at $20 million. Regulation Crowdfunding is capped at $5 million and must go through an intermediary's platform. Rule 504 is capped at $10 million.Regulation A Rule 251(a)(2)

An issuer that is not an SEC reporting company sold $3.5 million of securities under Rule 504 five months ago. What is the most it may sell now under Rule 504?

• a.$6.5 million✓
• b.$10 million
• c.$3.5 million
• d.$13.5 million

Rule 504 caps the aggregate offering price at $10 million, less the securities sold in the 12 months before and during the offering. With $3.5 million sold five months ago, the remaining capacity is $10 million - $3.5 million = $6.5 million. The full $10 million ignores the earlier sale, $3.5 million merely repeats it, and $13.5 million adds it instead of subtracting it.Securities Act Rule 504(b)(2)

A Delaware corporation has its principal place of business in Ohio and earns 85% of its revenue there. It advertises a stock offering online and sells only to Ohio residents. Can it use Rule 147A?

• a.Yes, but only if buyers hold the stock one year before reselling
• b.No, because an issuer must be incorporated in the state where it sells
• c.Yes, online ads are allowed if every sale is to an Ohio resident✓
• d.No, because any online advertising makes the offering interstate

Rule 147A treats an issuer as resident where its principal place of business is, so Delaware incorporation is irrelevant, and the 80% in-state revenue test is one way to show it does business there. The rule expressly permits general solicitation and advertising, provided all sales go to residents of the issuer's state. Resales are limited to in-state residents for six months, not one year.Securities Act Rule 147A

Which buyer qualifies as a qualified institutional buyer (QIB) for a Rule 144A resale?

• a.An insurance company that invests $60 million of unaffiliated securities
• b.A wealthy individual who personally holds $150 million of securities
• c.A registered dealer investing $12 million in unaffiliated securities✓
• d.A corporation that owns and invests $90 million of unaffiliated securities

Under Rule 144A(a)(1), a registered dealer is a QIB if it owns and invests on a discretionary basis at least $10 million of securities of unaffiliated issuers, so $12 million qualifies. The $100 million test covers institutions such as insurers and corporations, so $60 million and $90 million both fall short. A natural person cannot be a QIB however large the portfolio.Securities Act Rule 144A(a)(1)

Which primary offering of municipal bonds is exempt from Rule 15c2-12?

• a.$3 million of notes maturing in 18 months, sold to the public in $5,000 denominations
• b.$2 million of bonds in $5,000 denominations, sold to 20 institutions buying for themselves
• c.$2 million of bonds in $100,000 denominations, sold to 20 institutions buying for themselves✓
• d.$2 million of bonds in $100,000 denominations, sold to 50 institutions buying for themselves

Rule 15c2-12(d)(1) exempts a primary offering in authorized denominations of $100,000 or more sold to no more than 35 persons who are sophisticated and are not buying for more than one account or with a view to distribution, or one with a maturity of nine months or less. The first offering satisfies the denomination and 35-buyer tests. $5,000 denominations fail the denomination test, 50 buyers exceed the cap, and 18 months exceeds the nine-month limit.SEC Rule 15c2-12(d)(1)

An underwriter and a city sign the bond purchase agreement on Monday, November 16, 2026. Rule 15c2-12 requires the underwriter to contract to receive the final official statement within seven business days. By what date must it be delivered?

• a.Friday, November 20, the end of that same week
• b.Monday, November 23, seven calendar days later
• c.Tuesday, November 24, counting November 16 as day one
• d.Wednesday, November 25, the seventh business day✓

Rule 15c2-12(b)(3) calls for the final official statement within seven business days after the final agreement. Counting from the next business day: Nov 17 (1), 18 (2), 19 (3), 20 (4), 23 (5), 24 (6) and 25 (7), so the deadline is Wednesday, November 25, with no holiday in the period. November 23 counts calendar days. November 24 counts the agreement date as day one. November 20 is only four business days.SEC Rule 15c2-12(b)(3)

A selling-group dealer that is not a syndicate member sells a new-issue municipal bond to a customer. By when must it deliver the official statement to that customer under MSRB Rule G-32?

• a.It need not, because only the syndicate manager must deliver the statement
• b.Within seven business days after the trade date, matching the issuer's deadline
• c.By settlement of the transaction, whether or not the customer asks for it✓
• d.Only if the customer requests a copy, within one business day of the request

Rule G-32(a) bars any dealer from selling an offered municipal security to a customer, as underwriter or otherwise, without delivering the official statement by settlement of the transaction. It applies to every selling dealer, not just syndicate members, and it does not depend on a request. The seven-business-day period is the issuer-to-underwriter delivery deadline in Rule 15c2-12, and the request-based, next-business-day duty is a separate Rule 15c2-12 obligation for participating underwriters.MSRB Rule G-32(a)(i)

A city offers general obligation bonds for sale by competitive bid, and two syndicates submit bids. How does the city choose the winner?

• a.It picks the firm it prefers and negotiates the spread with it beforehand
• b.It awards the bonds to the syndicate with the most customers in the city
• c.It awards the bonds to the syndicate that proposes the largest underwriting spread
• d.It awards the bonds to the syndicate whose bid costs the city the least interest✓

In a competitive offering the issuer publishes a notice of sale and awards the bonds to the bidder offering the lowest interest cost to the issuer, measured as net interest cost or true interest cost. Choosing a firm in advance and negotiating the spread describes a negotiated offering. A larger spread raises the issuer's cost rather than lowering it, and customer base plays no role in the award.Municipal competitive-sale practice (issuer notice of sale; no single MSRB rule)

Before bidding on a new municipal issue, a participating underwriter must obtain an official statement that the issuer deems final. Which item may that document leave out?

• a.The issuer's outstanding debt summary
• b.The offering prices and interest rates✓
• c.The source of repayment of the bonds
• d.The issuer's recent financial statements

Rule 15c2-12(b)(1) allows the preliminary official statement to omit only the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings, other terms depending on these matters, and the identity of the underwriters. Everything else, including financial information, the source of repayment and the issuer's debt, must already be in the document.SEC Rule 15c2-12(b)(1)

Under the continuing disclosure undertaking required by Rule 15c2-12, within how long after a payment default on the bonds must notice be filed with the MSRB?

• a.With the next annual financial report
• b.Five business days after the event
• c.Ten business days after the event✓
• d.Thirty calendar days after the event

Rule 15c2-12(b)(5)(i)(C) requires the undertaking to provide notice of listed events, including principal and interest payment delinquencies, to the MSRB in a timely manner not in excess of ten business days after the event. Thirty days is too long and five business days is shorter than the rule requires. Waiting for the annual report would delay a material event notice far beyond the deadline.SEC Rule 15c2-12(b)(5)(i)(C)

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)