FINRA Series 6 — All Questions

A customer's order for 60 shares is executed and the firm charges an odd-lot differential separate from its other remuneration. What must the confirmation disclose?

• a.Whether one was paid, with the amount furnished on oral or written request✓
• b.Nothing, because odd-lot differentials are an exchange fee outside the rule
• c.The exact differential in dollars, printed on every confirmation for an odd-lot trade
• d.Whether one was paid, with the amount furnished only if requested in writing

Rule 10b-10(a)(3) requires the confirmation to say whether an odd-lot differential or equivalent fee was paid and that the amount will be furnished on oral or written request. Limiting the request to writing is wrong, since oral requests also count. The amount does not have to be printed, and the differential is a customer cost that the rule specifically addresses.17 CFR 240.10b-10(a)(3)

A customer's account at a general securities member has held 100 shares of a fund and a small cash balance for six months with no trades. How often must the member send account statements for it?

• a.Once every six months, since the account has had no recent activity
• b.At least once each calendar quarter, as it holds a position and a balance✓
• c.Once a year, on the anniversary of the account opening date
• d.Only in the quarters in which at least one transaction occurs in the account

Rule 2231(a) requires account statements at least once each calendar quarter showing securities positions, money balances and account activity, so an account holding a position or balance gets a statement even without trades. Tying statements to trading activity, or to a semi-annual or annual schedule, would leave the customer without the required quarterly view of the account.FINRA Rule 2231(a)

A general securities member carries a DVP/RVP account for an institution and wants to stop sending it account statements. When may the member do so?

• a.Once the member sends a confirmation for each trade made in the account
• b.After twelve straight months pass without any trade in the account
• c.Only if the customer affirmatively elects or consents to forgo them✓
• d.Automatically, because DVP/RVP accounts are outside the scope of Rule 2231

Rule 2231 lets a DVP/RVP customer affirmatively elect not to receive account statements, but the member cannot stop them unilaterally; the customer's consent preserves its ability to receive them. DVP/RVP accounts are not exempt by default, confirmations are a separate duty that does not replace statements, and inactivity does not release the member.FINRA Rule 2231(b)

A firm reports plan purchases to a customer by periodic statement in place of confirmations. Besides each purchase and the plan's share total, what must the statement include?

• a.The name of the contra party to each of the underlying fund share transactions
• b.A projection of the account's value if the plan continues through its stated end date
• c.Any remuneration the firm received and a note that other information is available on request✓
• d.The firm's most recent net capital computation as of the end of the quarterly period

Rule 10b-10(b)(2) requires the periodic statement to show each purchase or redemption and reinvested distribution, the date, the identity, number and price of the securities, the total shares in the account, any remuneration received, and a statement that the remaining paragraph (a) information will be furnished on written request. Net capital computations are internal records, a projection is not required, and a contra party name is not a periodic statement item.17 CFR 240.10b-10(b)(2)

A firm needs to know how long to keep the customer ledger accounts required by Rule 17a-3(a)(3). What is the retention requirement?

• a.Six years, with the first two in an easily accessible place✓
• b.Six years after the account is closed, with no accessibility rule
• c.For the life of the enterprise and of any successor enterprise
• d.Three years, with the first two readily accessible

Rule 17a-4(a) requires the blotters, general ledger, customer ledger accounts and securities record to be preserved for at least six years, the first two in an easily accessible place. Three years is the period for order memoranda and confirmations. The six-years-after-closing period belongs to account cards and records of account terms, and life-of-enterprise retention covers corporate documents and Forms BD and BDW.17 CFR 240.17a-4(a)

In October 2026 a broker-dealer clears storage of records that are four years old. Under SEC Rule 17a-4, which of these records may it lawfully discard?

• a.Account cards for an account closed two years ago (six years after closing)
• b.Articles of incorporation and Forms BD, kept for the life of the enterprise
• c.Customer ledger accounts and the general ledger, kept for six years
• d.Order memoranda and confirmations, which carry a three-year retention period✓

Order memoranda and confirmations fall under Rule 17a-4(b), which requires three years, so records four years old are past that period. Customer ledgers need six years under paragraph (a), corporate documents and Forms BD are kept for the life of the enterprise under paragraph (d), and account cards are kept six years after the account closes under paragraph (c), which has not yet elapsed.17 CFR 240.17a-4(a)-(d)

A broker-dealer must keep order memoranda for three years. How must it hold them during that period?

• a.With the final year kept easily accessible
• b.With the first two years kept easily accessible✓
• c.With the first year kept easily accessible
• d.With each of the three years kept easily accessible

Rule 17a-4(b) requires records such as order memoranda, confirmations and communications to be kept for at least three years, the first two in an easily accessible place. The accessibility window therefore covers the first two years, not one, not all three, and not the last year when the records are oldest.17 CFR 240.17a-4(b)

A customer opened a margin account on January 12, 2021 and closed it on March 3, 2025. Under Rule 17a-4(c), what is the earliest date the firm may destroy the account card that records the terms of the account?

• a.March 3, 2028, which is three years after the account closed
• b.March 3, 2031, which is six years after the account was closed✓
• c.January 12, 2027, which is six years after the account was opened
• d.Never, because account cards are kept for the life of the enterprise

Rule 17a-4(c) requires account cards and records of the terms and conditions of opening and maintaining an account to be kept at least six years after the account is closed. Six years after March 3, 2025 is March 3, 2031. The clock does not run from the opening date, the three-year period belongs to order memoranda and similar records, and life-of-enterprise retention covers corporate formation documents.17 CFR 240.17a-4(c)

Which item must appear on a memorandum of a brokerage order under Rule 17a-3?

• a.A designation of the order as discretionary, if entered under discretionary authority✓
• b.The customer's stated investment time horizon on the date of the order
• c.The customer's annual income, net worth and investment objectives at the time of entry
• d.The commission amount the customer was charged on the executed trade

Rule 17a-3(a)(6)(i)(A) requires an order entered under the discretionary authority of the firm or an associated person to be so designated on the memorandum, along with the terms, account, times, execution price and responsible associated person. Income and net worth belong to the account record, commissions appear on the confirmation, and time horizon is not an order memorandum element.17 CFR 240.17a-3(a)(6)(i)(A)

A customer phones in an order at 10:02 a.m. The representative completes the ticket at 10:05, the ticket is transmitted to the trading desk for execution at 10:09, and the order executes at 10:12. What does Rule 17a-3 treat as the order's time of entry?

• a.10:12 a.m., when the order was executed on the market
• b.10:02 a.m., when the customer called in the order
• c.10:09 a.m., when the order was transmitted for execution✓
• d.10:05 a.m., when the representative wrote the ticket

Rule 17a-3(a)(6)(i)(A) defines time of entry as the time the firm transmits the order or instruction for execution, which here is 10:09. The memorandum records the time received (10:02) separately, and it also records the time of execution (10:12) to the extent feasible. The time the ticket was completed has no separate significance under the rule.17 CFR 240.17a-3(a)(6)(i)(A)

A customer enters a limit order, then cancels it at midday before any execution occurs. Must the firm keep an order memorandum for it?

• a.Yes, because the rule applies to orders whether executed or unexecuted✓
• b.Yes, but only when the cancellation results in a fee charged to the customer
• c.No, because only orders that actually execute require a memorandum under the rule
• d.No, if the representative notes the cancellation on the customer's statement

Rule 17a-3(a)(6)(i) requires a memorandum of each brokerage order whether executed or unexecuted, and the memorandum must show any modification or cancellation. A cancelled order is therefore documented even though it never executed. Fees are irrelevant to the requirement, and a note on an account statement does not replace the order memorandum.17 CFR 240.17a-3(a)(6)(i)

How often must a broker-dealer prepare the trial balances of its ledger accounts and its net capital computation under Rule 17a-3?

• a.Currently, at least once every year, with the audit
• b.Currently, at least once every business day
• c.Currently, at least once every calendar month✓
• d.Currently, at least once every calendar quarter

Rule 17a-3(a)(11) requires the proof of money balances in trial balances and the computation of aggregate indebtedness and net capital to be prepared currently at least once a month. A quarterly or annual preparation would be too infrequent, and daily preparation is more than the rule requires.17 CFR 240.17a-3(a)(11)

Under Rule 17a-3, what must a firm's employment application record for a new associated person include about the person's work history?

• a.A complete, consecutive statement of business connections for at least ten years✓
• b.A list of the person's securities licenses held during the last five years
• c.The person's income and employer references for the past three years
• d.A summary of only the most recent employer, with the reason for leaving

Rule 17a-3(a)(12)(i)(C) requires a complete, consecutive statement of all business connections for at least the preceding ten years, including whether the work was part-time or full-time. The application also records disciplinary history, certain arrests and other names used. A single employer, a five-year licensing list and a three-year reference list all fall short of the rule.17 CFR 240.17a-3(a)(12)

A registered representative's association with a firm ended on January 15, 2026, and the firm holds the Rule 17a-3(a)(12) employment application. What is the earliest date the firm may destroy it?

• a.January 15, 2029, three years after the association ended✓
• b.January 15, 2028, which is two years after the association ended
• c.The date three years after the representative was first hired
• d.January 15, 2032, which is six years after the association ended

Rule 17a-4(e)(1) requires employment applications to be kept until at least three years after the person's employment and any other connection with the firm has ended. January 15, 2026 plus three years is January 15, 2029. Six years is the period for account records, two years is too short, and counting from the hire date would let the firm discard it while the person was still associated.17 CFR 240.17a-4(e)(1)

A firm receives a customer's notice of an address change on June 10. By what date must it send notice of the change, and to which address?

• a.July 10, to the customer's old address and the responsible associated person✓
• b.July 10, to the customer's new address and the responsible representative
• c.July 25, to the customer's new address and the representative
• d.July 25, to the old address and the responsible representative

Rule 17a-3(a)(17)(i)(B)(2) requires a firm that updates an account record for a name or address change to send notice of the change to the customer's old address, and to the responsible associated person, on or before the 30th day after it received notice. Thirty days after June 10 is July 10. Sending only to the new address defeats the purpose, which is to alert the customer if the change was not authorized, and the 45-day date has no basis.17 CFR 240.17a-3(a)(17)(i)(B)(2)

A firm has used a supervisory procedures manual since 2019 and replaces it with a new one on April 1, 2026. What is the earliest date it may destroy the old manual under Rule 17a-4?

• a.Today, since more than three years have passed since it was adopted in 2019
• b.Never, because manuals are kept for the life of the enterprise
• c.April 1, 2032, which is six years after the manual was last used by the firm
• d.April 1, 2029, which is three years after the manual stopped being used✓

Rule 17a-4(e)(7) requires each compliance, supervisory and procedures manual, with its updates, to be kept until three years after the termination of its use. The clock starts when use ends on April 1, 2026, so the date is April 1, 2029. Counting from adoption would discard it too soon, six years is a different category, and life of the enterprise applies to formation documents.17 CFR 240.17a-4(e)(7)

A firm generates an exception report that reviews customer accounts for unusual activity on February 1, 2026. What is the earliest date it may stop retaining that report under Rule 17a-4?

• a.February 1, 2032, which is six years after the report was run
• b.August 1, 2027, which is eighteen months after the report was run✓
• c.February 1, 2027, which is twelve months after the report was produced
• d.February 1, 2029, which is three years after the report was run

Rule 17a-4(e)(8) requires reports produced to review for unusual activity in customer accounts to be kept until eighteen months after the report was generated, and a firm may instead produce them promptly on a regulator's request. Eighteen months after February 1, 2026 is August 1, 2027. The twelve-month, three-year and six-year periods belong to other kinds of records or are not in the rule.17 CFR 240.17a-4(e)(8)

How long must a firm keep a copy of each Form CRS it creates?

• a.Until the customer's account closes, with no period afterward
• b.Until the next Form CRS update replaces it on the firm's website
• c.At least six years after it is created, easily accessible✓
• d.At least three years after it is created, with easy access throughout

Rule 17a-4(e)(10) requires a copy of each Form CRS, and the records required by Rule 17a-3(a)(24), to be kept at least six years after they are created, in an easily accessible place. Three years is the period for many other records, and neither account closing nor replacement by an updated form ends the retention period.17 CFR 240.17a-4(e)(10)

On Wednesday, October 14, 2026, a carrying firm receives a properly completed transfer instruction for a customer's account. By what date must the carrying firm validate the instruction or take exception to it?

• a.Thursday, October 15, one business day after receipt✓
• b.Wednesday, October 14, the day the instruction arrives
• c.Friday, October 16, two business days after receipt
• d.Monday, October 19, three business days after receipt

Rule 11870 requires the carrying member to validate a transfer instruction or take exception to it within one business day after receiving it. Receipt on Wednesday makes Thursday the deadline. Friday and Monday correspond to two- and three-business-day periods; three business days is the period for completing the transfer after validation, not for validating. Same-day action is quicker than the rule demands and is not the deadline.FINRA Rule 11870(b)

A carrying firm validates a customer's transfer instruction on Thursday, October 15, 2026, and takes no exception to it. By what date must it complete the transfer of the account assets?

• a.Wednesday, October 21, four days after validation
• b.Monday, October 19, two business days after validation
• c.Tuesday, October 20, the third business day after validation✓
• d.Friday, October 16, one business day after validation

Rule 11870 requires the carrying member to complete the transfer within three business days following validation. Counting from Thursday, October 15, Friday is the first business day, Monday the second and Tuesday the third. Monday is only two days, Friday matches the one-day validation period that has already been used, and Wednesday runs one day past the limit.FINRA Rule 11870(e)

A registered representative who joined a firm ten days ago telephones a customer she served at her prior firm to discuss moving the account. What must the new firm do under FINRA Rule 2273?

• a.Read the educational communication aloud during the call and keep a record of the reading, with no written delivery needed
• b.Mail the educational communication only after the customer returns signed transfer documents to the new firm's branch office
• c.Say orally that the communication will follow; send it within three business days or with transfer papers, if sooner✓
• d.Send the educational communication within ten business days of the call, whether or not transfer documents have been sent

When a recently hired representative contacts a customer of the prior firm by phone, Rule 2273 requires the new firm to say orally that an educational communication will follow and then deliver it within three business days or with the account transfer documents, whichever is earlier. Reading it aloud does not replace the delivery, waiting for signed documents can miss the earlier deadline, and ten business days is longer than the rule allows.FINRA Rule 2273

A representative joined a member firm on September 1. She contacts a former customer about moving the account on each date below. On which date is the firm still required to provide the Rule 2273 educational communication?

• a.December 15, about fifteen weeks after she started
• b.November 20, about eleven weeks after her start date✓
• c.January 12, about nineteen weeks after she started
• d.February 9, about twenty-three weeks after she started

Rule 2273 applies to contacts made during the first three months after the representative's start date. September 1 plus three months ends December 1, so only the November 20 contact is covered. The other three contacts all come after that period, so the rule does not require the educational communication for them.FINRA Rule 2273

A broker-dealer that is going out of business wants to move all of its retail accounts to another firm in bulk, but many customers cannot be reached for signatures. What consent approach does FINRA guidance say may be appropriate?

• a.No customer consent at all, since a firm leaving the business may assign its accounts as it sees fit
• b.A Rule 1017 membership application approved by FINRA, in place of any customer consent
• c.Affirmative consent from each customer, since negative consent is allowed only for single-account transfers
• d.Negative consent, used for bulk transfers only in limited situations such as a firm leaving the business✓

FINRA generally expects affirmative customer consent to transfer or assign an account, but Regulatory Notice 26-03 says negative consent may be appropriate in limited bulk situations where affirmative consent is unworkable, such as a firm going out of business. Moving accounts with no consent at all could conflict with the duty to observe high standards of commercial honor under Rule 2010. Negative consent is a bulk tool, and single-account transfers proceed under Rule 11870 on the customer's instruction. A Rule 1017 application concerns FINRA's approval of membership changes and does not replace customer consent.FINRA Regulatory Notice 26-03

Which of the following is a factor FINRA Rule 5310 lists for deciding whether a member used reasonable diligence to obtain the best market for a customer's order?

• a.The commission the firm expects to earn on the transaction
• b.The firm's own inventory position in the security at the time
• c.The customer's stated investment objective on the account form
• d.The number of markets the member checked for the order✓

Rule 5310(a)(1) lists the character of the market, the size and type of the transaction, the number of markets checked, the accessibility of the quotation, and the terms and conditions of the order. The firm's commission and inventory are firm-side interests, not listed factors, and the customer's investment objective belongs to suitability and best-interest analysis rather than the best execution factors.FINRA Rule 5310(a)(1)

A firm routes most customer orders to outside venues but fills a customer's market order from its own inventory. How must the firm review best execution for the order it filled internally?

• a.Through its quarterly regular and rigorous review, the same way it reviews the orders it routes out
• b.By relying on the execution statistics of the outside venues that handle its routed orders
• c.Order by order, because a regular and rigorous review alone does not cover orders the firm executes internally✓
• d.Through the order-routing disclosures it publishes each quarter under Rule 606 of Regulation NMS

Regulatory Notice 15-46 explains that a regular and rigorous review can satisfy best execution only for the decision whether to route an order and for orders routed outside the firm. Orders the firm decides to execute internally are subject to an order-by-order analysis. Rule 606 reports are disclosures, not an execution-quality analysis, and statistics from outside venues say nothing about fills the firm made itself.FINRA Rule 5310, Supplementary Material .09

A firm relies on regular and rigorous reviews of execution quality for orders it routes to other venues. At a minimum, how often must it conduct those reviews?

• a.Semiannually, in line with the firm's supervisory control testing
• b.Monthly, because the rule sets that minimum for equities
• c.Annually, together with its annual certification of compliance processes
• d.Quarterly, and more often if the firm's business calls for it✓

FINRA states that firms using a regular and rigorous review must conduct it at least quarterly, and Supplementary Material .09 adds that a firm should consider whether its business calls for more frequent reviews. Some firms review monthly, but monthly is a practice, not the rule's minimum. Semiannual and annual cycles are too infrequent.FINRA Rule 5310, Supplementary Material .09

A customer enters an unsolicited order and instructs the firm to route it to a particular market. The firm accepts the order and has access to that market. What is the firm's best execution duty?

• a.A full best execution analysis, overriding the instruction if another market shows a better price
• b.None beyond the instruction, but it must process the order promptly and under its terms✓
• c.It must reject the order, since a firm may not accept routing instructions from customers
• d.None at all, because the customer chose the venue and the firm may work the order when convenient

Under Supplementary Material .08, a firm handling an unsolicited directed order need not make a best execution determination about the market beyond the customer's instruction, but it still must handle the order promptly and according to its terms. Overriding the instruction would disregard what the customer directed. A firm is not obligated to accept directed orders, yet nothing prohibits accepting them.FINRA Rule 5310, Supplementary Material .08

A member could execute a customer's order directly with the best market but sends it through another broker-dealer as thanks for business that firm refers to the member. How does FINRA Rule 5310 treat this?

• a.As permitted, because a member may route an order to any registered broker-dealer it chooses to reward for referrals
• b.As prohibited interpositioning, because reciprocating for referrals does not justify placing a third party between the member and the market✓
• c.As permitted, because Rule 5310 applies only when the member acts as agent, not when it trades as principal
• d.As permitted, provided the firm records the referral arrangement in its written supervisory procedures and reviews it each year

Rule 5310 bars a member from interjecting a third party between itself and the best market in a manner inconsistent with the rule, and it says that channeling orders through a third party to reciprocate for service or business does not relieve the member of its obligations. Here the member could execute directly, so the narrow exception for a member that cannot execute directly does not apply. The obligations apply to principal transactions as well as agency ones. Documenting the arrangement and a general freedom to route do not change the result.FINRA Rule 5310(a)(2), (c)

A customer holds a good-til-canceled order to buy 200 shares of XYZ at $40.00, not marked Do Not Reduce. XYZ goes ex-dividend on a $0.375 cash dividend. At what price must the member enter the order for the ex-date?

• a.$39.62, reduced by $0.375 and rounded down to the next cent✓
• b.$40.00, because only the order's size changes for a cash dividend
• c.$39.63, reduced by $0.375 and rounded to the nearest cent
• d.$40.38, because the order is raised by the dividend and rounded up

Rule 5330(a)(1) reduces the price of an open buy order by the dollar amount of the cash dividend and then rounds the result down to the next lower minimum quotation variation. $40.00 less $0.375 is $39.625, which rounds down to $39.62. Rounding to the nearest cent gives $39.63, which the rule does not use. A cash dividend adjusts price, not size, and the adjustment lowers the price rather than raising it.FINRA Rule 5330(a)(1)

A customer has a good-til-canceled order to sell 300 shares of ABC at a limit of $55.00. ABC goes ex-dividend on a $0.50 cash dividend. How does FINRA Rule 5330 treat the order?

• a.The price is reduced to $54.50 on the ex-date, unless the customer marked the order Do Not Reduce
• b.The price is raised to $55.50 on the ex-date so the customer is made whole for the dividend
• c.The price stays at $55.00, because a sell limit is not an open order under the rule's definition✓
• d.The order is cancelled on the ex-date and the customer must reenter it if still wanted

Rule 5330(d) defines an open order as an order to buy or an open stop order to sell, so a sell limit order is not adjusted for a cash dividend. The reduction applies to buy orders and sell stop orders, which is why the Do Not Reduce marking matters for them. Raising the price would make a sell order harder to fill rather than compensate the customer. Cancellation is for reverse splits, not cash dividends.FINRA Rule 5330(d)

A customer holds a good-til-canceled order to buy 500 shares of a stock at $8.00. The company then completes a 1-for-10 reverse split. What does FINRA Rule 5330 require the member to do with the order?

• a.Leave it unchanged, since reverse splits are adjusted only for sell orders, not buy orders
• b.Cancel the order, since a pending order in a security that is reverse split must be cancelled✓
• c.Convert it to 50 shares at $80.00 so that the order keeps the same total dollar value
• d.Hold it for reconfirmation with the customer, then adjust it as it would for a forward split

Rule 5330(b) says that when a pending order involves a security that is the subject of a reverse split, the order, buy or sell, is cancelled. The member does not convert it, leave it alone, or adjust it as for a forward split. Reconfirmation with the customer is the procedure for a distribution whose value cannot be determined, which is a different situation.FINRA Rule 5330(b)

A customer has a good-til-canceled order to buy 300 shares of DEF at $60.00, with no Do Not Reduce or Do Not Increase instruction. DEF effects a 3-for-2 forward split. How must the order read after the ex-date?

• a.450 shares at $40.00 (size times 3/2 and price times 2/3)✓
• b.450 shares at $60.00 (size adjusted, but price left unchanged)
• c.300 shares at $40.00 (price adjusted, but size left unchanged)
• d.200 shares at $90.00 (size times 2/3, price times 3/2)

Rule 5330(a)(2) lowers the order price for a stock split and, unless marked Do Not Increase, raises the size by multiplying by the numerator and dividing by the denominator of the split ratio. Here 300 times 3 divided by 2 is 450 shares, and the price falls from $60.00 to $40.00. Leaving the size or the price unchanged ignores half of the adjustment, and applying the inverse ratio moves both in the wrong direction.FINRA Rule 5330(a)(2)

A customer's regular-way purchase of a listed stock is executed on Wednesday, November 25, 2026. Thursday, November 26, is Thanksgiving Day and the markets are closed. On what date does the trade settle?

• a.Monday, November 30, two business days after the trade date
• b.Friday, November 27, the next business day after the trade✓
• c.Tuesday, December 1, three business days after the trade date
• d.Thursday, November 26, one calendar day after the trade date

Regular-way settlement is the first business day following the trade date under Rule 15c6-1(a) and FINRA Rule 11320(b). Thanksgiving is not a business day, so the first business day after Wednesday is Friday. Counting Thursday treats the holiday as a business day. Monday is a T+2 date and Tuesday is a T+3 date, which are earlier settlement cycles no longer used for regular-way trades.17 CFR 240.15c6-1(a); FINRA Rule 11320(b)

A customer buys 100 shares of a listed stock in a cash account on Tuesday, October 13, 2026, and has not yet paid. Under Regulation T, by what date must the firm obtain full payment? No holidays fall in the period.

• a.Wednesday, October 14, the regular-way settlement date
• b.Monday, October 19, four business days after the purchase
• c.Thursday, October 15, the second business day after the purchase
• d.Friday, October 16, the third business day after the purchase✓

Regulation T requires full payment within one payment period of the purchase. The payment period is the number of business days in the standard settlement cycle plus two, and with a one-business-day cycle that is three business days. Counting from Tuesday, October 13, the third business day is Friday, October 16. Wednesday is the settlement date, but Regulation T allows two more business days, and Thursday and Monday do not match the three-day period.12 CFR 220.8(b)(1); 12 CFR 220.2

A customer buys stock in a cash account, sells it before paying for it, and does not pay within the payment period. Under Regulation T, what restriction follows?

• a.For the next 90 calendar days, the customer must pay in full by the trade date for any purchase✓
• b.For the next 90 calendar days, the account may be used only to close out the positions it already holds
• c.The account is converted to a margin account and must meet 50 percent initial margin
• d.For the next 30 calendar days, the customer must pay in full by the trade date on every purchase

Under Regulation T's 90-day freeze, when a security is sold without having been paid for in full, the privilege of delaying payment beyond the trade date is withdrawn for 90 calendar days after the sale. The 30-day version swaps the number. The closing-only limit is not part of the rule, and a cash account does not become a margin account automatically.12 CFR 220.8(c)(1)

A customer buys $9,000 of stock in a cash account and sends $8,250 by the end of the payment period. Under Regulation T, what may the firm do about the $750 shortfall?

• a.Liquidate the entire purchase, because Regulation T allows no shortfall after the period
• b.Disregard it only after its examining authority has approved an extension of the period
• c.Disregard it only if the customer deposits the balance within five business days
• d.Disregard it at its option, because a creditor may disregard an unpaid sum of $1,000 or less✓

Regulation T normally requires a creditor to cancel or liquidate a purchase that is not paid for in full in time, but section 220.8(b)(4) lets the creditor, at its option, disregard any sum due of $1,000 or less. A $750 shortfall falls under that limit, so no extension is needed and no further grace period applies. Liquidating the whole purchase is not required.12 CFR 220.8(b)(4)

A customer's check for a cash-account purchase will not clear before the payment period ends, and the firm wants more time. Who may extend the period, and when must the firm apply?

• a.The Federal Reserve Board, on an application the firm files within five business days after the payment period ends
• b.The firm's examining authority, on an application filed before the period ends for exceptional circumstances✓
• c.The firm's own principal, who may grant up to five business days with a supervisor's written approval
• d.The firm's examining authority, on an application the firm files within ten days after the period ends

Section 220.8(d) lets the creditor's examining authority extend the payment period on the creditor's application, unless it believes the creditor is not acting in good faith or has not sufficiently determined that exceptional circumstances warrant the extension. The application must be filed and acted on before the payment period ends, so one filed after the period is too late. The Federal Reserve Board does not grant these extensions, and a firm cannot extend the period for itself.12 CFR 220.8(d)(1)-(2)

A customer's margin purchase on Wednesday, October 14, 2026, creates a Regulation T margin deficiency. By what date must the customer satisfy the margin call? No holidays fall in the period.

• a.Monday, October 19, the third business day following the trade date✓
• b.Friday, October 16, the second business day following the trade date
• c.Tuesday, October 20, the fourth business day following the trade date
• d.Thursday, October 15, the first business day after the trade was executed

A Regulation T margin call must be satisfied within one payment period after the deficiency was created, and with a one-day settlement cycle the payment period is three business days. From Wednesday, October 14, the third business day is Monday, October 19. Thursday is only the settlement date, Friday is two days, and Tuesday is one day past the limit.12 CFR 220.4(c)(3)

A customer buys 400 shares of a listed stock at $62.50 in a margin account. Under Regulation T, what is the minimum initial margin?

• a.$37,500, equal to 150 percent of the purchase price, as for a short sale
• b.$25,000, equal to the full $25,000 purchase price of the shares
• c.$12,500, equal to 50 percent of the $25,000 purchase price of the 400 shares✓
• d.$6,250, equal to 25 percent of the $25,000 purchase price of the shares

Regulation T requires 50 percent of the current market value of a margin equity security, so a $25,000 purchase needs $12,500. Twenty-five percent is the usual maintenance level set by FINRA, not the Regulation T initial requirement. Full payment applies to a cash account or a nonmargin security, and 150 percent is the short sale requirement in section 220.12(c).12 CFR 220.12(a)

Under Regulation T, what initial margin applies to a customer's purchase of money market fund shares in a margin account?

• a.The amount the creditor requires in good faith, not a fixed percentage✓
• b.One hundred percent of current market value, since fund shares are nonmargin
• c.Fifty percent of the shares' current market value, as for other margin equity
• d.Twenty-five percent of the shares' current market value, the usual maintenance level

Section 220.12(b) sets the margin for an exempted security, a non-equity security or a money market mutual fund at the amount the creditor requires in good faith. The 50 percent requirement in section 220.12(a) excludes money market funds, the 100 percent requirement applies to nonmargin equity securities, and 25 percent is a maintenance concept rather than the Regulation T requirement.12 CFR 220.12(b)

A company declares a regular quarterly cash dividend, well under 25 percent of the stock's value, with a record date of Friday, October 16, 2026. Regular-way trades settle one business day following the trade date. What is the last trade date on which a buyer is entitled to the dividend?

• a.Thursday, October 15, the business day before the ex-dividend date✓
• b.Monday, October 19, the first business day after the record date
• c.Wednesday, October 14, two business days before the record date, the old cycle
• d.Friday, October 16, the record date and also the ex-dividend date

Under Rule 11140(b)(1), the ex-dividend date for a dividend of this size is the record date when that date is a business day, so the stock trades ex-dividend on Friday, October 16. The last cum-dividend purchase is therefore Thursday, October 15, which settles on the record date. Wednesday reflects the former two-day cycle, and buyers on Friday or Monday do not receive the dividend.FINRA Rule 11140(b)(1)

A member firm that sells mutual fund shares directly to retail customers receives a customer's order on Monday, October 5, 2026, and the customer's payment on Wednesday, October 7. By what end of day must the firm transmit the payment under FINRA Rule 2341(m)(1)?

• a.Friday, October 9, two business days after the payment arrives at the firm
• b.Wednesday, October 7, the former two business days after the order arrives
• c.Thursday, October 8, one business day after the payment arrives✓
• d.Tuesday, October 6, one business day after the order arrives

Rule 2341(m)(1), as amended for the one-day settlement cycle, requires transmittal by the end of one business day after receipt of the order or one business day after receipt of the payment, whichever is later. The payment came in later, so the deadline is Thursday. Tuesday is the earlier of the two measures, Wednesday reflects the former two-business-day period from the order, and Friday adds a day the rule does not allow.FINRA Rule 2341(m)(1)

A firm-commitment underwritten offering is priced at 6:00 p.m. ET on Tuesday, October 20, 2026. Absent an express agreement on another date, what is the latest date on which the cash contracts for the offered securities may provide for payment and delivery?

• a.Wednesday, October 21, one business day after the pricing
• b.Friday, October 23, three business days after the pricing
• c.Tuesday, October 27, five business days after the pricing
• d.Thursday, October 22, two business days after pricing✓

Rule 15c6-1(c) lets contracts for securities priced after 4:30 p.m. ET in a firm-commitment underwritten offering settle as late as the second business day after the contract date, rather than the first business day required by the general rule in paragraph (a). Tuesday evening pricing therefore allows settlement through Thursday. Wednesday is the ordinary one-day date and is not the latest, while Friday and Monday exceed the limit.17 CFR 240.15c6-1(c)

A firm sends a comparison for a trade that does not clear through a registered clearing agency, executed on Monday. By the end of Monday it has received no comparison, confirmation or signed Don't Know notice from the contra-member. When may the firm begin the Rule 11210 DK procedures?

• a.Only on the settlement date, after the contra-member has failed to deliver the securities
• b.At the end of Monday, because DK procedures may be used once the trade date ends with no response✓
• c.Immediately after execution, because a DK notice may go out before the contra-member responds
• d.At the close of Tuesday, one business day following the trade date, the threshold before T+1

As amended effective May 28, 2024 for the one-day settlement cycle, Rule 11210(c) lets the confirming member use the DK procedures if it receives no comparison, confirmation or signed DK from the contra-member by the end of the day on the trade date. The earlier threshold was the close of one business day following the trade date. Waiting for the settlement date is not what the rule says, and a DK notice is not available the moment the order is executed because the contra-member has until the end of the trade date to respond.FINRA Rule 11210(c)

A firm accepts a customer's delivery-versus-payment purchase order and executes it on Monday. By when must the firm give the customer a confirmation, or the data customarily on one, under FINRA Rule 11860(a)(3)?

• a.Within five business days, the same period that applies to periodic plan statements
• b.The settlement date, once the agent has received the securities or payment
• c.The close of business Tuesday, the next business day, as the rule read before T+1
• d.The end of the day on Monday, the trade date, rather than the next business day✓

Rule 11860(a)(3) was amended for the one-day cycle to require the confirmation, or its customary data, no later than the end of the day on the trade date. The prior rule allowed until the close of business on the next business day. Tying delivery to the agent's receipt of securities or payment, or borrowing the five-business-day period from periodic plan statements, has no basis in the rule.FINRA Rule 11860(a)(3)

A company declares a special cash distribution equal to 40 percent of its stock's value, with a record date of Friday, October 16 and a payable date of Friday, October 30, 2026. On what date does the stock begin trading ex-distribution?

• a.Friday, October 16, the record date for the distribution
• b.Friday, October 30, the payable date of the distribution
• c.Thursday, October 15, the last business day before the record date
• d.Monday, November 2, the first business day after the payable date✓

Rule 11140(b)(2) sets a different ex-date for distributions that are 25 percent or more of the security's value: the first business day following the payable date. That is Monday, November 2. The record date is the ex-date only under the normal rule in paragraph (b)(1) for smaller distributions, and the payable date itself is one day too early.FINRA Rule 11140(b)(2)

A customer alleges that a registered representative made unsuitable trades in her account and files a claim against the representative and the member firm with FINRA Dispute Resolution. Her account agreement has no arbitration clause. Must the member arbitrate?

• a.No, because the member is bound to arbitrate only when its account agreement contains a written arbitration clause
• b.Yes, because the customer requested arbitration and the dispute arises from the member's securities business✓
• c.No, because the member may insist on court unless it again consents in writing after the dispute arises
• d.Yes, but only after the customer first completes a mediation of the claim administered by FINRA

Rule 12200 requires arbitration of a dispute between a customer and a member or associated person that arises in connection with the member's business activities when the customer requests it, even if no pre-dispute clause exists. A written clause is one route to mandatory arbitration, not the only one. A post-dispute written agreement is the separate route under Rule 12201 and is not needed when the customer asks. Mediation is voluntary and is not a step the customer must complete first.FINRA Rule 12200

A customer files a FINRA arbitration claim against an associated person who is inactive when the claim is filed. When is the claim eligible for arbitration under the Customer Code?

• a.Only if the customer files the claim within 60 days after the person became inactive
• b.Only if the inactive person's former member firm consents to the use of the FINRA forum
• c.Always, because an associated person's status does not affect the customer's right to arbitrate
• d.Only if the customer agrees in writing to arbitrate after the claim arises✓

Under Rule 12202(a), a claim by or against a member or associated person who is inactive at the time of filing is ineligible unless the customer agrees in writing to arbitrate after the claim arises. The former firm's consent does not cure the defect, and inactive status does matter, so eligibility is not automatic. The 60-day figure comes from Rule 12202(b), which lets a customer withdraw a pending claim after a respondent becomes inactive during the case, not a filing deadline.FINRA Rule 12202(a)

A class action over alleged undisclosed fund fees is pending in federal court, and a putative class member has an account agreement with an arbitration clause. May the firm enforce the clause against that customer for the class claims?

• a.No, not until certification is denied, the class is decertified, or the customer is excluded or opts out✓
• b.Yes, once the firm gives the customer 30 days' written notice that it intends to invoke the clause
• c.Yes, because a pre-dispute arbitration clause in the account agreement governs any claim the customer holds
• d.No, because class members can never be required to arbitrate, even after the court denies certification

Rule 12204 bars arbitration of class action claims under the Code, and paragraph (d) says a member may not enforce an arbitration agreement against a member of a certified or putative class until certification is denied, the class is decertified, or the customer is excluded or elects not to participate. The clause does not override that rule, and notice cannot substitute for one of the listed events. The protection is not permanent, because it ends once one of those events occurs.FINRA Rule 12204(a), (d)

A customer buys an annuity in June 2020 and files a FINRA arbitration claim in July 2026 alleging the sale was unsuitable. What is the status of the claim under the Code's time limit?

• a.Ineligible, because six years have elapsed since the event; dismissal does not by itself keep her out of court✓
• b.Eligible, because the six-year limit applies only to claims against associated persons, not members
• c.Ineligible, and a dismissal on that ground also bars the customer from filing the claim in court
• d.Eligible, because the six years run from when the customer discovered the problem with the product

Rule 12206(a) makes a claim ineligible once six years have elapsed from the occurrence or event giving rise to it, and the panel resolves eligibility questions. June 2020 to July 2026 is more than six years. The period runs from the event, not from discovery, and it applies to claims against members as well. Rule 12206(b) says a dismissal under the rule does not prohibit a party from pursuing the claim in court.FINRA Rule 12206(a)