FINRA Series 6 — All Questions

A customer's order to redeem fund shares reaches the firm at 4:30 p.m. Eastern, after the 4:00 p.m. NAV calculation. The order is executed at the:

• a.average of that day's NAV and the following day's NAV
• b.next NAV calculated after the fund receives the order✓
• c.last NAV the customer saw, if the customer asks for it
• d.NAV set at 4:00 p.m. that day, if the firm stamps the order

Rule 22c-1 requires forward pricing: orders are priced at the next NAV computed after receipt. Giving a customer the earlier price after the close is late trading, which is illegal.Rule 22c-1 under the Investment Company Act of 1940

A customer is about to invest $48,000 in a fund that offers a lower sales charge at $50,000. A representative knows this and recommends the $48,000 purchase anyway to earn the higher commission. This is:

• a.a normal sale, because the breakpoint is not reached
• b.a rights of accumulation sale, which is permitted
• c.a breakpoint sale, which violates FINRA rules✓
• d.a discount sale, which is permitted for any investor

Recommending a purchase just below a breakpoint so the representative earns the larger commission is a breakpoint sale, which violates FINRA Rule 2342. The rep should tell the customer about the discount available at the next level, and about rights of accumulation or a letter of intent.FINRA Rule 2342

Under typical mutual fund prospectus terms, a customer signs a letter of intent today. How far back may purchases be counted toward the letter of intent total?

• a.90 days before the date the letter is signed✓
• b.30 days before the signing date
• c.Purchases made before the letter cannot be counted
• d.13 months before the signing date, the length of the completion period

Funds commonly let purchases made up to 90 days before the letter of intent is signed count toward it, and then give the investor 13 months to complete it; many prospectuses start that period at the earliest purchase counted. The 13 months run forward, not backward, and the 30-day window belongs to the wash-sale rule, while 13 months is the completion period, not a look-back. Letter-of-intent terms are set by each fund's prospectus, not by a FINRA rule.Fund prospectus terms (letter of intent)

During which hours may a representative make telemarketing calls to a prospect?

• a.Between 8 a.m. and 9 p.m. in the representative's local time
• b.Between 8 a.m. and 9 p.m. in the prospect's local time✓
• c.Between 8 a.m. and 6 p.m. in the prospect's local time
• d.Between 9 a.m. and 5 p.m. in the prospect's local time

Telemarketing calls are limited to the hours of 8 a.m. to 9 p.m. in the called person's local time. A rep calling across time zones must use the prospect's clock, not his or her own.Telemarketing Sales Rule; FINRA Rule 3230

A registered representative is named in a new customer complaint that must be reported. By when must the firm amend the representative's Form U4 for most events?

• a.Within 30 days after the firm learns of the event✓
• b.Within 10 days, the period that applies to every reportable event
• c.At the end of the calendar year in which the event occurred
• d.Within 60 days, once the firm has finished its own internal review

Form U4 must be kept current, and the firm generally has 30 days to amend it after learning of the facts. The 10-day deadline applies only to certain events, such as a statutory disqualification, not to every reportable event. Waiting for the end of the year or for an internal review to finish is not permitted; the clock runs from when the firm learns of the event.FINRA By-Laws, Art. V, Sec. 2(c); Form U4

Which of the following is one of the four component obligations of Regulation Best Interest?

• a.The pricing parity obligation
• b.The continuous monitoring obligation
• c.The conflict of interest obligation✓
• d.The best execution obligation

Reg BI rests on the disclosure, care, conflict of interest and compliance obligations. It does not impose a continuing duty to monitor an account unless the firm has agreed to provide monitoring. Best execution is a separate duty that applies to order handling, not to recommendations. Nothing in Reg BI requires uniform pricing across customers.SEC Regulation Best Interest (Rule 15l-1)

When must a broker-dealer deliver Form CRS to a retail investor?

• a.At or before the first recommendation, order or account opening✓
• b.Once a year, together with the annual proxy materials
• c.Only when the investor makes a written request for it
• d.Within 30 days after the new account is opened and funded

Form CRS is delivered at or before the first of the key events: a recommendation of an account type, a securities transaction or a strategy, an order placed, or an account opened. Waiting 30 days would let the sale happen before the relationship summary is seen. Delivery is not request-driven. Annual proxy delivery is unrelated to the relationship summary.SEC Rule 17a-14 (Form CRS)

A representative recommends that a retail customer buy a variable annuity for personal use. Which general conduct standard governs the recommendation?

• a.The ERISA fiduciary standard, because annuity contracts are retirement products
• b.Reg BI, plus the Rule 2330 requirements✓
• c.FINRA Rule 2111 suitability alone, with Rule 2330 as the only additional rule
• d.The Investment Advisers Act fiduciary standard, because the recommendation is personalized advice

Reg BI governs a broker-dealer's recommendation to a retail customer who will use it for personal purposes, and FINRA Rule 2111 does not apply to recommendations that are subject to Reg BI (Supplementary Material .08). Rule 2330 still adds specific requirements for deferred variable annuities, such as obtaining the customer's profile and evaluating exchanges. ERISA applies to employee benefit plans and their fiduciaries, not to a personal-use purchase. The Advisers Act fiduciary standard applies to investment advisers, not to a broker-dealer representative making a recommendation.17 CFR 240.15l-1; FINRA Rule 2330; FINRA Rule 2111 Supplementary Material .08

A representative submits a deferred variable annuity application. Within what time must a registered principal approve or reject it?

• a.Within thirty days after the free look ends
• b.Within three business days of issuance
• c.On the same day, before any premium is taken
• d.Within seven business days of receipt✓

Rule 2330 requires principal review within seven business days of receipt of the complete application at the supervisory office. Three days after issuance would allow the contract to be in force before review. Waiting until the free look ends would defeat the purpose of review. A same-day requirement is stricter than the rule.FINRA Rule 2330(c)

A customer is considering exchanging one deferred variable annuity for another. Which consequence must the representative be able to say the customer has been informed of?

• a.The replacement contract cannot carry mortality and expense charges
• b.A new surrender charge period may start✓
• c.The old insurer must refund all prior surrender charges
• d.The exchange eliminates the customer's tax liability on all future earnings

Rule 2330 requires the principal to find that the customer was informed of the consequences of an exchange, including surrender charges, loss of existing benefits and a new surrender period. An exchange does not wipe out tax on future earnings, because deferral simply continues. Charges already paid are not refunded, and replacement contracts typically do carry mortality and expense charges.FINRA Rule 2330(b)

A customer places a mutual fund purchase order with a representative at 3:55 p.m. Eastern, but the firm's order-entry delay means it is keyed at 4:20 p.m. The firm received the order before the 4:00 p.m. close. Which price applies?

• a.The price at the moment the order was finally keyed into the system
• b.The next business day's NAV, because the order was keyed after 4:00 p.m.
• c.A price negotiated with the fund's principal underwriter
• d.That day's NAV, because the firm received the order before 4:00✓

Forward pricing uses the next NAV computed after the order is received, and receipt before the close means that day's NAV. A keying delay cannot push the customer to a later price. Mutual fund shares are not priced intraday, so there is no keying-time price. Underwriters cannot negotiate individual prices.Investment Company Act of 1940, Rule 22c-1

An open-end fund receives a redemption request on Monday. Under the Investment Company Act, within how many days must it generally pay?

• a.At the fund's discretion, with no statutory limit
• b.Seven days after the shares are tendered✓
• c.Thirty days after the shares are tendered
• d.Fifteen days after the shares are tendered

Section 22(e) prohibits an open-end fund from postponing payment for more than seven days after tender, except in emergencies such as exchange closures. Thirty and fifteen days both exceed the statutory limit. The fund has no free discretion here, which is part of what makes open-end shares redeemable.Investment Company Act of 1940, Section 22(e)

A firm emails a market commentary to 40 retail investors over a 20-day period. How is the communication classified, and what is required before use?

• a.Institutional communication; exempt from principal review
• b.Correspondence; no principal approval is needed before use
• c.Retail communication; a principal must approve it first✓
• d.Internal communication; supervisory review is unnecessary

Written communication distributed to more than 25 retail investors in 30 calendar days is a retail communication, and a qualified principal must approve it before use. Correspondence is limited to 25 or fewer retail investors in that period. An institutional communication goes only to institutional investors, and an internal one never reaches customers.FINRA Rule 2210

A retail communication promoting a specific mutual fund family must be filed with FINRA's Advertising Regulation Department within what period?

• a.Never; fund ads go to the SEC only
• b.Thirty calendar days after first use
• c.Before first use, with prior FINRA approval
• d.Within ten business days of first use✓

Retail communications that promote or recommend a registered investment company or family must be filed within 10 business days of first use. Pre-use filing is a requirement for certain new-firm and specialized communications, not for fund promotions. Thirty days exceeds the rule. Filing with FINRA does not substitute for compliance with SEC advertising rules, as both apply.FINRA Rule 2210(c)(3)

Mutual fund advertising must present standardized average annual total return for which periods?

• a.One, five and ten years, or life of the fund if shorter✓
• b.Three, five and seven years, or life of the fund if shorter
• c.Five, ten and fifteen years, regardless of the fund's age
• d.One, three and five years, or life of the fund if shorter

Rule 482 standardizes returns over 1, 5 and 10 years, or since inception for a fund younger than that, so investors compare like with like. A one-three-five set is not the standard. Three-five-seven and five-ten-fifteen are not in the rule, and a fund younger than the longest period reports life of fund.SEC Rule 482

A broker-dealer carries customer accounts. How often must its anti-money laundering program be independently tested?

• a.Every two years, on a calendar-year basis
• b.Annually, on a calendar-year basis✓
• c.Only when requested by regulators
• d.Every three years, on a rolling basis

Rule 3310 requires annual independent testing on a calendar-year basis for firms that carry customer accounts or execute customer transactions. Every two years is allowed only for firms that do not execute customer transactions, hold customer accounts or act as an introducing broker. Three years has no support in the rule, and testing is not examiner-triggered.FINRA Rule 3310(c)

A broker-dealer detects suspicious activity involving $7,000 and identifies a suspect. By when must it file a suspicious activity report?

• a.Within 15 calendar days of the transaction
• b.Within 90 days, after an internal investigation is finished
• c.Within 60 calendar days, even though a suspect is identified
• d.Within 30 calendar days of initial detection✓

A SAR is required for suspicious transactions of at least $5,000 and is due within 30 days of initial detection when a suspect is identified. The 60-day period is available only when no suspect is identified. Fifteen days is not a rule requirement, and an internal investigation does not extend the clock.31 CFR 1023.320

After filing a suspicious activity report on a customer, a representative is asked by that customer whether a report was filed. What is the correct response?

• a.Decline to confirm or deny the filing✓
• b.Say that none was filed, to avoid alerting the customer
• c.Confirm it, but give no further details
• d.Confirm it, since the customer is entitled to know

SARs and any information that would reveal their existence are confidential, so the representative must neither confirm nor deny. Confirming, even without details, is a prohibited disclosure. Lying that none was filed is deceptive and creates its own problems. Declining to discuss it protects the investigation.31 CFR 1023.320(e)

A FINRA rule requires a firm to preserve a record but does not set a retention period, and no SEC rule does either. What is the minimum retention period?

• a.Three years
• b.Six years✓
• c.Four years
• d.Ten years

Rule 4511(b) sets a default of at least six years when neither FINRA nor Exchange Act rules specify a period. Three years applies to some specific SEC records, not to the default. Four years is tied to specific items such as written complaints under other FINRA rules. Ten years has no basis in the default.FINRA Rule 4511(b)

A firm reasonably believes an 80-year-old customer is the victim of financial exploitation and places a temporary hold on a disbursement. For how long may the hold initially last?

• a.Up to 30 calendar days
• b.Up to 5 business days
• c.Up to 15 business days✓
• d.Until the customer signs a release

Rule 2165 allows an initial temporary hold of up to 15 business days, with extensions available if the firm's review supports the belief or if it reports to authorities. Five business days is too short. Thirty calendar days is not the standard measure. A hold cannot wait for the customer, whose own signature may be the suspected problem.FINRA Rule 2165

Which of the following requires the firm to give a customer the opportunity to opt out under Regulation S-P?

• a.Sharing data with the customer's own accountant at the customer's request
• b.Sending data to the transfer agent to process the customer's requested trade
• c.Sharing customer data with a nonaffiliated marketing firm✓
• d.Responding to a valid subpoena from a regulator or court

Reg S-P requires an opt-out before nonpublic personal information goes to a nonaffiliated third party for its own marketing. Processing a requested transaction, legal compulsion, and disclosures made at the customer's direction fall within the exceptions, so no opt-out is needed. The common thread is that the customer gets a choice only when the sharing serves someone else's commercial interest.SEC Regulation S-P

Which action by an open-end fund generally requires approval by a vote of its shareholders?

• a.Changing from diversified to non-diversified status✓
• b.Adding a second portfolio manager to the management team
• c.Replacing the fund's custodian bank with a different bank
• d.Declaring the regular quarterly dividend to shareholders

Changing a fundamental policy such as diversification status requires a shareholder vote under the Investment Company Act. Operational matters such as the custodian, the individual manager or the dividend are board or management decisions. The shareholders' vote is reserved for changes that alter the nature of the investment they bought.Investment Company Act of 1940, Section 13(a)

What does the know-your-customer obligation require when an account is opened?

• a.Collecting only the customer's name and home address
• b.Reasonable efforts to learn essential facts✓
• c.Obtaining the customer's tax returns for the prior three years
• d.Requiring a minimum opening deposit before the account is approved

Rule 2090 requires reasonable diligence at the account's opening to know the essential facts about every customer and about anyone authorized to act on the account. Tax returns are not required. A name and address alone is far too little to know the customer. Minimum deposits are a firm business decision, not part of know-your-customer.FINRA Rule 2090

A new customer declines to provide a trusted contact person. What does Rule 4512 require?

• a.Ask for one; the account can still open✓
• b.Refuse to open the account until one is provided
• c.Name a trusted contact itself on the customer's behalf
• d.Obtain the name from the customer's employer

Rule 4512 requires reasonable efforts to obtain the name and contact information of a trusted person, but the customer's refusal does not stop the account from opening. The firm may not choose a contact for the customer, and the employer is not a source. The contact exists to help the firm protect the customer, not to qualify the account.FINRA Rule 4512

A mutual fund board adopts a redemption fee for short-term trading. What is the maximum fee under SEC rules?

• a.5% of the amount redeemed
• b.8.5% of the amount redeemed
• c.2% of the amount redeemed✓
• d.1% of the amount redeemed

Rule 22c-2 permits a redemption fee of up to 2%, aimed at market timing and short-term trading. One percent is within the limit but is not the maximum. Five percent exceeds it. The 8.5% figure is the old sales-charge ceiling under FINRA rules, a different charge for a different purpose.SEC Rule 22c-2

After its initial term, who must approve the continuation of a fund's advisory contract each year?

• a.The adviser alone, which sets its own fee yearly
• b.The board, with a majority of independents✓
• c.The SEC, which examines each renewal case by case
• d.The fund's custodian bank, after a fee review

Section 15(c) requires annual approval of continuation by the board, including a majority of the directors who are not interested persons, or by a vote of the shareholders. The custodian only safeguards assets and has no role in renewal. The SEC does not approve individual advisory contracts. Letting the adviser approve its own fee would be the conflict the independent-director requirement is meant to prevent.Investment Company Act of 1940, Section 15(c)

A fund's advertisement under Rule 482 must include which legend?

• a.A statement that the fund is insured by the FDIC for each shareholder
• b.A statement that the SEC has approved the fund's reported performance
• c.A prompt to read the prospectus before investing✓
• d.A statement that returns are guaranteed for the first full year

Rule 482 advertisements must tell investors to consider objectives, risks, charges and expenses and to read the prospectus carefully before investing. FDIC insurance does not apply to funds. Guarantees of returns are prohibited. The SEC never approves or endorses performance, and implying so is misleading.SEC Rule 482

Under the conflict of interest obligation of Reg BI, a firm must eliminate which practice?

• a.Offering both load and no-load funds to customers
• b.Time-limited contests tied to specific products✓
• c.Paying representatives any commission whatsoever
• d.Telling customers about the firm's fee schedule

The SEC specified that firms must eliminate sales contests, quotas, bonuses and non-cash compensation based on sales of specific securities or specific types within a limited period. Ordinary commissions are allowed if managed. Disclosure is encouraged, not prohibited. Offering a variety of share classes is acceptable if recommendations remain in the customer's best interest.SEC Regulation Best Interest

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For a first-time issuer with no prior reporting history, how long before it sends a confirmation must a broker-dealer give the buyer a preliminary prospectus?

• a.At the same time as the confirmation
• b.At least 5 business days before
• c.At least 48 hours before✓
• d.At least 24 hours before

Rule 15c2-8 requires delivery of the preliminary prospectus at least 48 hours before the confirmation goes out when the issuer has not previously reported under the Exchange Act. Twenty-four hours is too short, five business days is too long, and delivery with the confirmation would leave the buyer no time to read it before the sale.17 CFR 240.15c2-8(b)

An issuer sells securities under Rule 506(b) of Regulation D. How many non-accredited purchasers may it have in any 90-day period?

• a.No more than 100
• b.None; every buyer must be accredited
• c.No more than 10
• d.No more than 35✓

Rule 506(b) allows unlimited accredited investors and up to 35 non-accredited purchasers who meet the sophistication test in a 90-day period. Ten and one hundred are not limits under this rule. A rule requiring every purchaser to be accredited describes Rule 506(c), which also permits general solicitation but requires verification.17 CFR 230.506(b)

An issuer makes its first sale in a Regulation D offering on March 3. By what date must it file Form D?

• a.30 calendar days after March 3
• b.15 calendar days after March 3✓
• c.15 business days after March 3
• d.45 days after March 3

Form D is a notice filed within 15 calendar days after the first sale. Counting business days stretches the deadline by several days. Thirty and forty-five days are longer than the rule allows.17 CFR 230.503

An unmarried individual has a net worth of $800,000, excluding a primary home, and income of $210,000 in each of the last two years with the same expected this year. Is the person an accredited investor?

• a.Yes, because her net worth counting the primary home exceeds $1,000,000
• b.No, because the income test requires $300,000 for an individual filer
• c.No, because net worth excluding the home is below the $1,000,000 threshold
• d.Yes, because her income topped $200,000 in each of the last two years✓

The income test is met by individual income above $200,000 in each of the two most recent years with an expectation of reaching it again this year. Failing the net worth test does not matter because only one test must be met. The $300,000 figure is the joint income threshold. Net worth is counted without the primary home, and a person's home value is not a way to qualify here.17 CFR 230.501(a)

Under the intrastate offering exemption in Rule 147A, how long after the sale may a security be resold only to residents of the issuer's state?

• a.Two years
• b.Thirty days
• c.One year
• d.Six months✓

For six months after the issuer's sale, resales must be made only to residents of the issuer's state. Thirty days is shorter than the rule requires. One and two years are longer than the rule requires; they resemble the holding periods under Rule 144, which is a different exemption.17 CFR 230.147A

A broker-dealer representative sells mutual funds inside a bank branch under a networking arrangement. What disclosure must customers receive?

• a.The products are protected by the FDIC only if purchased with a check
• b.The bank guarantees repayment of principal on mutual funds
• c.The products are not FDIC-insured, not bank-guaranteed, and may lose value✓
• d.The products are insured by the bank up to $250,000 per depositor

Rule 3160 requires disclosure that the products are not FDIC-insured, not guaranteed by the bank, and may lose value. FDIC deposit insurance does not cover securities, so the bank cannot promise coverage. The method of payment has no effect on whether the FDIC insures a security.FINRA Rule 3160

A firm's retail communication cites a ranking of a mutual fund. Which requirement applies to the ranking?

• a.It may be one year old if the fund has more than $1 billion in assets
• b.It must come from the fund's own research department or its adviser
• c.It must cover at least ten years of performance, even for a new fund
• d.It must be current to the latest calendar quarter-end✓

A ranking must be, at a minimum, current to the most recent calendar quarter ended before the communication is used. It also must come from an independent ranking entity, or from a fund-created ranking that uses that entity's measurements. A ten-year period is not required, and a fund's size does not excuse a stale ranking.FINRA Rule 2212

A registered representative sends a tailored email about a corporate bond to 9 retail customers during one 30-day period. What does Rule 2210 require of the firm for this message?

• a.No review at all, because messages to 25 or fewer customers fall outside this rule's reach
• b.Filing with FINRA's Advertising Regulation Department within 10 business days after the message is first used
• c.Supervision and review under its correspondence procedures, not principal approval before first use✓
• d.Principal approval before first use, exactly as for any written message the firm sends to retail customers

Written communications to 25 or fewer retail investors in 30 days are correspondence, and correspondence is subject to the supervision and review requirements of Rule 3110(b) rather than the pre-use principal approval that applies to retail communications. The pre-use approval answer describes retail communications (more than 25 recipients). The 10-business-day post-use filing is a filing duty for certain fund communications, and correspondence is excluded from filing. The 25-recipient line separates correspondence from retail communications, but correspondence is still supervised.FINRA Rule 2210(a)(2), (b)(2)