FINRA SIE — Securities Industry Essentials — All Questions

Which federal agency has ultimate authority to oversee the U.S. securities markets and the self-regulatory organizations that operate within them?

• a.The Securities and Exchange Commission (SEC)✓
• b.The Financial Industry Regulatory Authority (FINRA)
• c.The Commodity Futures Trading Commission (CFTC)
• d.The Federal Reserve Board

The SEC, created by the Securities Exchange Act of 1934, is the top federal regulator of the securities industry. Self-regulatory organizations such as FINRA and the MSRB write and enforce their own rules but operate under SEC oversight, and their rules must be approved by the SEC.Securities Exchange Act of 1934

A broker-dealer wants to begin conducting a securities business for the first time. Which form must the firm file to register as a broker-dealer?

• a.Form U5
• b.Form U4
• c.Form BD✓
• d.Form ADV

A firm registers as a broker-dealer by filing Form BD (Broker-Dealer). Form U4 and U5 apply to individual associated persons, and Form ADV is used by investment advisers. Form BD is filed through the Central Registration Depository (CRD) system.17 CFR 240.15b1-1 (Exchange Act §15(b))

When a person applies to become registered as an associated person of a member firm, which form does the firm submit on their behalf?

• a.Form BD (the broker-dealer's own registration application)
• b.Form U5 (the Uniform Termination Notice filed when a person leaves a firm)
• c.Form ADV (the investment adviser's registration application)
• d.Form U4 (Uniform Application for Securities Industry Registration)✓

Form U4 is the Uniform Application for Securities Industry Registration or Transfer, filed by a member firm to register an associated person. It collects the applicant's employment, disciplinary, and background information. Form BD registers the firm itself, Form U5 is used later when the person's employment ends, and Form ADV is the registration application for investment advisers, not for a broker-dealer's associated persons.FINRA Rules

A registered representative resigns from her broker-dealer to take a job in a different industry. Within how many days must the firm file a Form U5 to report her termination?

• a.10 days
• b.60 days
• c.30 days✓
• d.45 days

A member firm must file Form U5 within 30 days of an associated person's termination. The firm must also provide a copy of the U5 to the individual. The U5 reports the reason for termination and any disclosures that arose.FINRA Rules

Which self-regulatory organization has primary jurisdiction over rules governing the municipal securities market, including the conduct of municipal securities dealers?

• a.The Chicago Board Options Exchange (CBOE)
• b.The SEC (Securities and Exchange Commission)
• c.The Municipal Securities Rulemaking Board (MSRB)✓
• d.FINRA (the Financial Industry Regulatory Authority)

The MSRB writes rules for the municipal securities market and for dealers and advisors in that market. However, the MSRB does not conduct examinations or enforcement itself; FINRA and bank regulators enforce MSRB rules for the firms they oversee.FINRA Rules

The Securities Industry Essentials (SIE) exam differs from a qualification exam such as the Series 7 in that the SIE:

• a.Permits an individual to transact securities business immediately upon passing, with no other exam
• b.Must be retaken every two years or the candidate's passing result is voided permanently
• c.Requires prior association with a member firm that must sponsor the candidate for testing
• d.Assesses basic securities industry knowledge and does not require sponsorship by a firm✓

The SIE is an introductory exam covering fundamental securities knowledge and can be taken by anyone 18 or older without firm sponsorship. To actually transact business, a person must also pass a qualification (top-off) exam like the Series 6 or 7, which does require association with a member firm.FINRA Rules

Under FINRA's continuing education requirements, the Regulatory Element is designed primarily to:

• a.Train representatives on the new products and services their firm intends to sell
• b.Keep registered persons current on regulatory, compliance, and ethical standards✓
• c.Satisfy each state's annual insurance licensing renewal requirements
• d.Provide sales, marketing, and client-prospecting skills training

The Regulatory Element is a FINRA-administered continuing education program that keeps registered persons up to date on regulatory, compliance, and ethical topics. It must be completed annually. The Firm Element is separately administered by each firm and focuses on products, services, and business practices.FINRA Rules

The Firm Element of continuing education is:

• a.Developed and administered by each member firm based on an annual needs analysis✓
• b.Required only of a firm's registered principals and supervisors, not its representatives
• c.Administered directly by the SEC through one standard nationwide curriculum
• d.A one-time requirement completed only at the time of initial registration

The Firm Element is a continuing education program that each member firm develops and administers itself, based on an annual needs analysis of its business and the securities its covered persons handle. It must, at minimum, address investment features, risks, suitability, and applicable regulatory requirements.FINRA Rules

A registered representative accepts a part-time job as a bookkeeper for a friend's restaurant on weekends, receiving compensation. Under FINRA rules on outside business activities, the representative must:

• a.Obtain written approval from the SEC before starting
• b.Do nothing, since the work is unrelated to securities
• c.Provide prior written notice to their employing member firm✓
• d.Register the restaurant as a branch office of the firm

FINRA Rule 3270 requires a registered person to provide prior written notice to their member firm before engaging in any outside business activity for compensation, even if unrelated to securities. The firm can then evaluate the activity and impose conditions or prohibit it if necessary.FINRA Rules

A registered representative wants to help set up private investments in a startup for several clients, outside of and without notice to her firm, receiving selling compensation. This activity is best described as:

• a.A standard brokerage transaction that requires no disclosure because the clients are her own
• b.A permissible outside business activity that needs only prompt written notice after the fact
• c.An acceptable referral arrangement under the $300 annual limit in FINRA's gift rule
• d.A private securities transaction ('selling away') requiring prior written notice and firm approval✓

Effecting securities transactions outside the regular course of one's employment for compensation is a private securities transaction, commonly called 'selling away.' FINRA Rule 3280 requires prior written notice to, and written approval from, the member firm; the firm must then supervise and record the transactions. Doing so without notice is a violation.FINRA Rule 3280

Under FINRA's gift rule, what is the maximum value of gifts a member or associated person may give to a single person per year in relation to the recipient's business?

• a.$300✓
• b.$100
• c.$50
• d.$500

FINRA Rule 3220 caps gifts at $300 per person per year when the gift relates to the recipient’s business. $100 was the limit until March 30, 2026, when Regulatory Notice 26-05 (SR-FINRA-2025-003) raised it to $300 — study material still printing $100 is out of date. Ordinary business entertainment and certain de minimis or personal gifts are treated separately, and firms must keep records of gifts given and received.FINRA Rules

MSRB Rule G-37 addresses political contributions by municipal securities dealers. What is the primary consequence if a dealer's covered associate makes a disqualifying political contribution to an official of an issuer?

• a.The dealer is banned from municipal securities business with that issuer for two years✓
• b.The contribution is refunded automatically and the matter is closed with no other penalty
• c.The associate must pay a $100 fine to the MSRB, and the dealer faces no business restriction
• d.The dealer must file a Form BD amendment within 10 days and may then continue that business

MSRB Rule G-37 generally bans a municipal securities dealer from engaging in municipal securities business with an issuer for two years after certain political contributions by the dealer or its covered associates to officials of that issuer. The rule is meant to curb 'pay-to-play' practices. A de minimis exception allows small contributions to candidates the contributor can vote for.FINRA Rules

A person applying for registration in the securities industry was convicted of a securities-related felony four years ago. This individual is most likely:

• a.Required only to complete extra continuing education
• b.Exempt from filing a Form U4
• c.Subject to statutory disqualification✓
• d.Automatically approved after a 30-day waiting period

A felony conviction, or a securities-related misdemeanor, within the past ten years can cause a person to be statutorily disqualified under the Securities Exchange Act of 1934 and FINRA rules. A statutorily disqualified person generally may not associate with a member firm unless FINRA grants relief through an eligibility proceeding. Other triggers include certain regulatory bars and injunctions.Securities Exchange Act of 1934

Before a person can be fingerprinted and registered as an associated person, fingerprinting is required primarily to:

• a.Determine the applicant's credit score before registration is granted
• b.Support a criminal background check for the registration process✓
• c.Confirm the applicant's citizenship status with immigration authorities
• d.Verify the applicant's college degree and other credentials

Exchange Act Rule 17f-2 requires each partner, director, officer and employee of a broker-dealer to be fingerprinted unless an exemption applies (for example, a person who is not engaged in sales, has no regular access to securities, money or original books and records, and has no supervisory responsibility over such persons). The fingerprints are submitted to the Attorney General (the FBI) for identification processing, which supports a criminal background check that helps identify statutory disqualifications. Fingerprints do not establish credit score, immigration status or educational credentials.Exchange Act Rule 17f-2 (17 CFR 240.17f-2)

A customer and a member firm have a monetary dispute arising from the customer's account. The customer signed an account agreement containing a predispute arbitration clause. The dispute will most likely be resolved through:

• a.FINRA arbitration under the Code of Arbitration Procedure✓
• b.An SEC administrative proceeding before an ALJ panel
• c.Mediation that is automatically binding on both parties
• d.A jury trial in federal district court in the customer's state

Most customer-firm disputes are resolved through FINRA's Dispute Resolution forum under the Code of Arbitration Procedure, especially when a predispute arbitration agreement exists. Arbitration decisions are generally final and binding with very limited grounds for appeal. Mediation is voluntary and non-binding unless a settlement is reached.FINRA Rules

FINRA's Code of Procedure (the Rule 8000 and 9000 series) primarily governs:

• a.How issuers file registration statements with the SEC before an IPO
• b.How FINRA investigates and disciplines members for rule violations✓
• c.How customers and firms arbitrate their monetary disputes before a panel
• d.How firms register new associated persons and their branch offices

The Code of Procedure governs FINRA's disciplinary process: how alleged rule violations are investigated, how complaints are brought, hearings held, and sanctions imposed. It is distinct from the Code of Arbitration Procedure, which handles monetary disputes between parties such as customers and firms. Sanctions can include fines, suspensions, and bars from the industry.FINRA Rules

A registered representative changes her residential address and also is charged with a felony. Which of these events requires an amendment to her Form U4?

• a.The felony charge alone requires a U4 amendment
• b.Both the change of address and the felony charge✓
• c.Neither event requires an amendment to the U4
• d.Only the address change, not the felony charge

Form U4 must be kept current: registered individuals have a continuing obligation to update changes to the information on the form by filing an amendment within the time FINRA rules and the form instructions prescribe. A change of residential address is a change to information reported on the form, and a felony charge is a reportable disclosure event, so both require an amendment. Answers that cover only one of the two events, or neither, are wrong because each change triggers its own update.FINRA Rules

Which of the following best describes the jurisdiction of the Chicago Board Options Exchange (CBOE) as a self-regulatory organization?

• a.It approves all broker-dealer registrations before FINRA does
• b.It supervises investment adviser registration for all fifty states
• c.It writes the rules governing every municipal securities dealer
• d.It operates an options exchange and enforces trading rules for its markets✓

The CBOE is a national securities exchange and self-regulatory organization focused on options trading and, through its exchange, enforces rules for trading on its markets. Exchanges like the CBOE and NYSE are SROs with jurisdiction over activity conducted on their platforms. FINRA and the MSRB handle broader member-firm and municipal rulemaking respectively.FINRA Rules

An individual passed the SIE exam but has not yet been hired by a member firm. How long do SIE exam results generally remain valid?

• a.10 years
• b.4 years✓
• c.2 years
• d.1 year

SIE exam results are generally valid for four years. Within that period, an individual who is hired and passes the appropriate qualification (top-off) exam can complete registration. If more than four years pass without registration, the SIE would need to be retaken.FINRA Rules

A candidate wants to sell mutual funds and variable annuities but not general equities or options. In addition to the SIE, which qualification exam is the appropriate 'top-off' for this limited scope?

• a.Series 7 (General Securities Representative, the exam required to sell mutual funds)
• b.Series 6 (Investment Company and Variable Contracts Products Representative)✓
• c.Series 63 (Uniform Securities Agent State Law, FINRA's packaged-products exam)
• d.Series 24 (General Securities Principal, required of every fund salesperson)

The Series 6 is a top-off qualification exam for representatives who sell packaged products such as mutual funds and variable annuities. The Series 7 covers a broader range of securities including equities, options, and bonds. Both are taken in addition to the SIE, and a firm must sponsor the candidate.FINRA Rules

A member firm receives a written customer complaint alleging misconduct by a registered representative involving the customer's funds. What is the firm's general obligation regarding this complaint?

• a.Keep it on file for one year, then discard it if no arbitration claim has been filed
• b.Report it to FINRA only after the representative has been found liable in arbitration or court
• c.Keep a record of the complaint and report it as required, including on the representative's Form U4 if applicable✓
• d.Respond to the customer directly and keep no record if the representative denies the allegation in writing

Written customer complaints must be kept on file even if the representative denies the allegation or the customer never files an arbitration claim. FINRA Rule 4513 requires complaint records to be preserved for at least four years, not one. Under Rule 4530 the firm must report certain complaints to FINRA, such as written complaints alleging theft, misappropriation or forgery, within 30 calendar days after it knows or should have known of them, and must file quarterly complaint statistics; it does not wait for a finding of liability. Where required, the representative's Form U4 disclosures are updated as well.FINRA Rules 4513 and 4530

Which statement about the relationship between FINRA and the SEC is most accurate?

• a.FINRA is a federal government agency that supervises and approves the SEC's rules
• b.The SEC drafts FINRA's rulebook and enforces it directly against registered representatives
• c.FINRA is a self-regulatory organization whose rules and disciplinary actions are subject to SEC oversight✓
• d.FINRA and the SEC operate independently, with neither overseeing the other's rules

FINRA is a non-governmental self-regulatory organization registered with and overseen by the SEC. FINRA proposes rules that require SEC approval, and its disciplinary decisions can be appealed to the SEC. The SEC retains ultimate statutory authority over the securities markets.FINRA Rules

Under general recordkeeping rules of the Securities Exchange Act of 1934, certain fundamental broker-dealer records, such as blotters and ledgers, must generally be retained for a minimum of:

• a.1 year
• b.2 years
• c.6 years✓
• d.3 years

SEC Rules 17a-3 and 17a-4 set recordkeeping and retention requirements for broker-dealers. Certain core records such as blotters, general ledgers, and customer account records must generally be retained for at least six years, with the first two years in an easily accessible place. Other records have shorter retention periods, such as three years.Securities Exchange Act of 1934

A newly hired individual will supervise the firm's general securities sales activities and approve new accounts. To act as a supervisor, this person must typically qualify as a:

• a.Principal (for example, by passing the Series 24)✓
• b.Representative only, by passing SIE and Series 7
• c.Municipal advisor representative (Series 50)
• d.Investment banking representative (Series 79)

Individuals who supervise the securities business of a member firm must generally register as principals, such as by passing the Series 24 General Securities Principal exam. A representative registration (SIE plus Series 7) qualifies a person to sell to customers but not to manage and supervise that activity or approve new accounts. The Series 50 qualifies municipal advisor representatives, and the Series 79 qualifies investment banking representatives; neither covers supervising general securities sales. Both representatives and principals must also pass the SIE.FINRA Rules

A registered representative gives a client four tickets to a concert worth $80 total as a thank-you related to their business relationship. Under the FINRA gift rule, this gift is:

• a.Permissible because it is under the $300 annual limit and should be recorded✓
• b.A violation because FINRA Rule 3220 caps non-cash customer gifts at $50 a year
• c.A violation because FINRA Rule 3220 prohibits all gifts to customers outright
• d.Permissible only if the SEC first approves the gift in writing before it is given

The $80 gift is within FINRA’s $300 annual per-person gift limit under Rule 3220, so it is generally permissible, though the firm should record it. The limit was $100 until Regulatory Notice 26-05 (SR-FINRA-2025-003) raised it to $300 effective March 30, 2026. Multiple gifts to the same person exceeding the annual limit would violate the rule. Business entertainment where the rep attends is evaluated under separate standards.FINRA Rules

How does the Form U5 filed by a departing representative's firm affect the individual's ability to move to a new member firm?

• a.It has no effect on future registration because Form U5 is kept confidential inside FINRA
• b.The new firm reviews the U5, and any disclosures on it may need to be addressed during the new registration✓
• c.It automatically transfers all of the representative's customer accounts to the new member firm
• d.It permanently bars the person from re-registering with another FINRA member firm in any capacity

When a representative leaves a firm, the firm files Form U5, which may include disclosures about the reason for departure or any pending matters. A new hiring firm reviews the U5 as part of due diligence and must address any disclosed issues in the new Form U4. Inaccurate U5 disclosures can create liability for the filing firm.FINRA Rules

Which of the following is generally NOT within FINRA's direct regulatory jurisdiction?

• a.Advertising and communications with the public by members
• b.Sales practices of member firms
• c.The conduct of a broker-dealer's registered representatives
• d.The rulemaking authority over the U.S. futures markets✓

FINRA regulates broker-dealers and their associated persons, including sales practices and communications with the public. The U.S. futures markets are regulated by the CFTC and the National Futures Association, not FINRA. Understanding which regulator governs which market is a core SIE concept.FINRA Rules

A registered person fails to complete their required Regulatory Element continuing education by the applicable deadline. What is the typical consequence?

• a.The person's registration becomes CE inactive, and they cannot perform activities requiring registration until it is completed✓
• b.The person is permanently barred from the securities industry by an automatic FINRA disciplinary action
• c.There is no consequence at all, provided the person's annual Firm Element training has been completed
• d.The person must retake and pass the SIE exam before returning to any registered activity at the firm

If a registered person does not complete the Regulatory Element by the deadline, their registration becomes 'CE inactive,' and they may not perform activities requiring registration until they complete it. The Regulatory Element must be completed annually for each registration category held. This is separate from the Firm Element, which the firm administers.FINRA Rules

The Central Registration Depository (CRD) system, operated by FINRA, primarily serves to:

• a.Set the initial margin requirements that apply to customer accounts under Regulation T
• b.Approve securities for listing on the national securities exchanges before trading may begin
• c.Clear and settle securities trades between member firms and guarantee their completion
• d.Store registration, employment, and disciplinary information about firms and associated persons✓

The CRD is the central licensing and registration system for the U.S. securities industry, maintained by FINRA. It houses information from Forms BD, U4, and U5, including employment history and disciplinary records. Much of this information is made available to the public through BrokerCheck.FINRA Rules

A representative wants to participate in a private securities transaction on behalf of a customer and will NOT receive any selling compensation. Under FINRA rules, the representative must at minimum:

• a.Obtain the firm's prior written approval and supervision exactly as if compensation were paid
• b.Report the transaction directly to the SEC on Form 4 within two business days
• c.Provide prior written notice to the firm, which may then require it to be supervised✓
• d.Do nothing at all, since Rule 3280 does not apply without selling compensation

Under FINRA Rule 3280, when a representative engages in a private securities transaction without selling compensation, they must still provide prior written notice to the firm. The firm may, at its discretion, require that the transaction be recorded and supervised. When compensation IS received, the firm must approve and supervise the transaction and record it on its books.FINRA Rules

In a FINRA arbitration involving a public customer, which statement is generally TRUE about the outcome?

• a.Only monetary damages up to $10,000 may be awarded, and no other relief
• b.The hearing panel must include two industry arbitrators and one public arbitrator
• c.The arbitration award is final and binding with very limited grounds to challenge it✓
• d.The losing party may freely appeal the decision and have the case retried in state court

FINRA arbitration awards are final and binding, and courts will overturn them only on very narrow grounds such as fraud or arbitrator misconduct. Customer disputes are heard by panels structured under FINRA rules, often allowing customers to choose an all-public panel. Arbitration is generally faster and less formal than court litigation.FINRA Rules

The Securities Exchange Act of 1934 is best known for:

• a.Regulating the secondary trading of securities and creating the SEC✓
• b.Governing the structure of mutual funds
• c.Setting rules exclusively for municipal bond issuers
• d.Requiring registration of securities before their initial public offering

The Securities Exchange Act of 1934 regulates the secondary market (trading of already-issued securities), broker-dealers, and exchanges, and it created the SEC. By contrast, the Securities Act of 1933 focuses on the primary market and the registration of new securities offerings. Understanding this distinction is fundamental to the SIE.Securities Exchange Act of 1934

A firm discovers that one of its representatives opened a brokerage account at another member firm without notifying either firm. Under FINRA rules on accounts at other broker-dealers, the representative generally must:

• a.Report the account only to the SEC within 30 calendar days of opening it
• b.Take no action, because personal brokerage accounts are private and fall outside FINRA rules
• c.Notify the executing firm of their association and notify their employer of the account✓
• d.Close the account immediately and file a written explanation with FINRA

Under FINRA Rule 3210, an associated person who opens an account at another firm must generally notify their employing member firm and inform the executing firm of their association. The executing firm must, upon request, send duplicate confirmations and statements to the employer. This allows firms to monitor associated persons' personal trading.FINRA Rules

Which of the following registration categories would a person most likely need to sell general securities, including stocks and bonds, to retail customers?

• a.Series 27 Financial and Operations Principal
• b.Series 6 Investment Company Products representative
• c.Series 24 General Securities Principal
• d.Series 7 General Securities Representative✓

The Series 7 General Securities Representative registration, taken together with the SIE, qualifies a person to sell a broad range of securities including stocks, bonds, and options to retail customers. The Series 6 is limited to packaged products. Principal categories such as Series 24 and 27 are for supervisory and financial-operations roles, not general retail sales.FINRA Rules

A representative is offered, and wants to accept, an appointment to the board of directors of a private company in exchange for a fee. Under FINRA rules, this is best handled as:

• a.An outside business activity requiring prior written notice to the firm✓
• b.A reportable gift, logged against FINRA's $300 annual per-person gift limit
• c.A political contribution subject to the two-year ban under MSRB Rule G-37
• d.A private securities transaction requiring the firm's prior written approval

Serving as a director of an outside company for compensation is an outside business activity under FINRA Rule 3270, requiring prior written notice to the employing member firm. The firm then evaluates whether the activity raises conflicts or must be limited. This is different from a private securities transaction, which involves effecting securities transactions away from the firm.FINRA Rules

FINRA's BrokerCheck tool is best described as:

• a.An internal tool used only by SEC examiners when building enforcement cases against firms
• b.An order-entry system that member firms use to place and route customer securities trades
• c.A private subscription database available only to member firms and their compliance staff
• d.A free public service that discloses registration and disciplinary information about firms and brokers✓

BrokerCheck is a free online tool operated by FINRA that lets the public research the background, registration status, and disciplinary history of brokerage firms and individual brokers. Much of its information is drawn from the CRD system, including data from Forms U4 and U5. It helps investors make informed decisions before doing business with a firm or representative.FINRA Rules

The federal agency that oversees the entire securities industry and approves the rules adopted by self-regulatory organizations is the:

• a.FINRA
• b.MSRB
• c.SEC✓
• d.Federal Reserve Board

The SEC is the top federal regulator and approves the rules SROs adopt. FINRA and the MSRB are SROs/rule-writers under SEC oversight; the Federal Reserve handles monetary policy and credit.

An individual seeking to register as a representative applies, through the sponsoring firm, by filing:

• a.Form U4✓
• b.Form U5
• c.Form BD
• d.Form 10-K

An individual registers by filing Form U4 through the sponsoring firm. Form U5 reports a departure, Form BD registers the firm, and Form 10-K is an issuer's annual report.

Which statement about the SIE exam is correct?

• a.It requires employer sponsorship in order to take it
• b.Passing it alone fully qualifies a person to transact securities business
• c.It replaces all top-off representative-level exams
• d.Anyone may take it, even without association with a firm✓

Anyone may take the SIE, even without firm association or sponsorship. Passing it alone does not fully qualify a person, and it does not replace the top-off exams.

The Regulatory Element of continuing education is:

• a.Training that each individual member firm designs and delivers from its own needs analysis
• b.Completed on the second, fifth, and tenth anniversaries of initial registration
• c.A portion of the SIE exam that is completed once, when a person first registers
• d.Standardized, industrywide training on compliance and ethics completed on a set schedule✓

The Regulatory Element is standardized, industrywide training that a registered person completes on a set schedule: FINRA Rule 1240 requires it annually by December 31 for the person's registration category. Firm-designed training based on the firm's own needs analysis is the Firm Element. It is not tied to multi-year registration anniversaries, and it is not part of the SIE, which is a one-time qualification exam.FINRA Rule 1240

Under FINRA Rule 3220, a gift given in connection with the business to a person at another firm may not exceed:

• a.$100 per recipient per year
• b.$300 per recipient per year✓
• c.$500 per recipient per year
• d.Any amount; there is no limit

FINRA Rule 3220 caps business gifts at $300 per recipient per year — raised from $100 by Regulatory Notice 26-05 (SR-FINRA-2025-003), effective March 30, 2026. The $100 figure is the old limit and is a trap for anyone studying from pre-2026 materials; $500 and “no limit” have never been the rule.

When a registered representative leaves a firm, the firm reports the termination by filing:

• a.Form U5✓
• b.Form U4
• c.Form BD
• d.A new registration statement

A firm reports a representative's departure by filing Form U5. Form U4 registers the person, Form BD registers the firm, and a registration statement is for a securities offering.

To become fully qualified as a general securities representative, a candidate who has passed the SIE must also:

• a.Wait a mandatory five years
• b.Personally file Form BD
• c.Pass a top-off (representative-level) exam, which requires firm sponsorship✓
• d.Do nothing further; passing the SIE alone is sufficient to transact business

After the SIE, a candidate must pass a top-off (representative-level) exam, which requires firm sponsorship, to be fully qualified. There is no five-year wait, the individual does not file Form BD, and the SIE alone is not sufficient.

Which self-regulatory organization writes the rules governing the municipal securities market, including the conduct of municipal securities dealers?

• a.The North American Securities Administrators Association (NASAA)
• b.The SEC's Office of Municipal Securities
• c.The Municipal Securities Rulemaking Board (MSRB)✓
• d.FINRA (the Financial Industry Regulatory Authority)

Congress created the Municipal Securities Rulemaking Board under Section 15B of the Securities Exchange Act of 1934 to write the rules for municipal securities dealers, municipal advisors and the municipal market. The MSRB does not examine or enforce its own rules; FINRA examines and enforces them for broker-dealers, and the SEC and bank regulators oversee the rest. NASAA is an association of state regulators and is not a rulemaking self-regulatory organization, and the SEC oversees the MSRB rather than writing the dealer conduct rules itself.Securities Exchange Act of 1934 Section 15B(b)

MSRB Rule G-37 addresses political contributions by municipal securities dealers. What is the primary consequence if a dealer's municipal finance professional makes a contribution to an issuer official that is not covered by the de minimis exception?

• a.The dealer is banned from municipal securities business with that issuer for two years✓
• b.The dealer is banned from municipal securities business with that issuer for one year
• c.The dealer may continue the business but must disclose the contribution on Form G-37
• d.The dealer is banned for two years from municipal securities business with every issuer in the state

MSRB Rule G-37(b) bars a dealer from engaging in municipal securities business with a municipal entity (issuer) for two years after a contribution to an official of that issuer by the dealer, a municipal finance professional of the dealer, or a political action committee controlled by either. The ban is tied to the issuer whose official received the contribution, not to every issuer, and it lasts two years, not one. Quarterly disclosure on Form G-37 is also required, but disclosure does not replace the ban. A de minimis exception lets a municipal finance professional contribute up to $250 per candidate, per election, to an official he or she is entitled to vote for.MSRB Rule G-37(b)

A registered representative gives the head trader at an institutional client four concert tickets, with a face value and cost of $60 each, as a thank-you for the client's business. The representative will not attend. Under FINRA Rule 3220, this gift is:

• a.Permitted, because the $240 total is under the $300 per-person annual limit✓
• b.A violation, because the limit is $100 per person per year
• c.Permitted without limit, because gifts tied to the client's business are exempt from the rule
• d.A violation, because the rule bans any gift of tickets unless the representative attends the event too

Rule 3220 bars a member from giving anything of value over $300 per individual per year to an employee or agent of another party in relation to the business of that person's employer. The limit was $100 until FINRA raised it to $300 effective March 30, 2026 (Regulatory Notice 26-05). Tickets are valued at the higher of cost or face value, here $240 in total, and all gifts to the same person in a year count together. The rule applies precisely because the gift relates to the recipient's employer's business, so being a thank-you for business does not exempt it. Tickets the representative does not use with the recipient are treated as a gift subject to that limit, not banned outright. Gifts to individual retail customers fall outside Rule 3220.FINRA Rule 3220

A firm discovers that one of its representatives opened a brokerage account at another member firm without notifying either firm. Under FINRA Rule 3210 on accounts at other broker-dealers, the representative was generally required to:

• a.Obtain the executing firm's prior written consent, then notify the employer of the account within 30 days
• b.Notify the employer within 30 days after opening the account, with no notice to the executing firm
• c.Obtain the employer's prior written consent and notify the executing firm in writing of the association✓
• d.Obtain the employer's prior written consent, and tell the executing firm only if it asks

Under FINRA Rule 3210, an associated person must not open an account at another member (the executing member) or at any other financial institution without the employer member's prior written consent, and must notify the executing member in writing of the association. On request the executing member sends the employer duplicate confirmations and statements. Consent comes from the employer, not the executing firm, it must come before the account is opened rather than afterward, and the executing firm must also be told of the association. The 30-day period applies only to an account that already existed when the person became associated with the employer.FINRA Rule 3210

Under FINRA Rule 3220 as amended effective March 30, 2026, what is the most a member firm or associated person may give one individual at another firm in business-related gifts in a year?

• a.$100 per individual each year
• b.$300 per individual per year✓
• c.$500 per individual per calendar year
• d.$300 per individual per gift, with no annual cap

FINRA Rule 3220 prohibits giving anything of value above $300 per individual per year in relation to the recipient's employer's business. The limit was raised from $100 effective March 30, 2026 (Regulatory Notice 26-05). The limit is measured per year in the aggregate, not per gift, and there is no $500 figure in the rule.FINRA Rule 3220

The primary mission of the Securities and Exchange Commission (SEC) is to:

• a.Protect investors and keep markets fair and orderly✓
• b.Set short-term interest rates for the economy
• c.Write and enforce each state's securities laws
• d.Insure deposits at banks and credit unions

The SEC protects investors, maintains fair, orderly, and efficient markets, and facilitates capital formation, by enforcing the federal securities laws. The FDIC insures bank deposits, the Federal Reserve sets monetary policy, and state securities administrators enforce state securities laws.

A broker-dealer hires a new registered representative. Which form does the firm file to register the individual?

• a.Form ADV, the application to register as an investment adviser
• b.Form U4, the Uniform Application for Securities Industry Registration✓
• c.Form U5, the Uniform Termination Notice for Securities Industry Registration
• d.Form BD, the Uniform Application for Broker-Dealer Registration

Form U4 is the application a firm files through the CRD system to register an individual. Form U5 reports the end of a person's registration. Form BD registers the firm itself as a broker-dealer. Form ADV registers an investment adviser firm.FINRA By-Laws Article V, Section 2