FINRA SIE 证券入门考试 — 全部题目

某公司的一家分支机构由监督管辖办事处（OSJ）监督，该分支机构收到一份客户书面投诉。公司须将该投诉记录保存在何处，保存多久？

• a.仅保存在分支机构本身，至少两年
• b.仅保存在总部办公室，至少六年
• c.保存在 OSJ，直到投诉得到解决为止
• d.保存在 OSJ 的投诉档案中，至少四年✓

Rule 4513 要求公司在每个 OSJ 保存与该办事处有关的客户书面投诉档案或记录，包括其所监督的业务活动，并至少保存四年。仅在分支机构保存不符合要求，因为该分支机构由 OSJ 监督。六年是其他某些公司记录的保存期限，而不是投诉的保存期限。投诉解决后也不能销毁记录，因为四年的期限无论如何都适用。FINRA Rule 4513

一位客户通过电话向某公司合规官表示，一名代表盗取了她账户中的资金，但她始终没有以书面形式提出该指控。仅凭这通电话是否触发 Rule 4530(a)(1)(B) 的报告义务？

• a.否，因为该条款仅涵盖客户的书面投诉✓
• b.是，须在 30 日内报告，因为盗窃指控一律须报告
• c.否，因为客户从未说明被盗取的金额
• d.是，但只须列入随后的季度统计报告

触发 Rule 4530(a)(1)(B) 的是涉及盗用、侵占或伪造指控的客户书面投诉。口头指控不符合该定义，不过公司仍应调查，若随后认定发生违规，可能仍须报告。盗窃指控并非任何形式都须报告，而季度报告汇总的是书面投诉，因此不会涵盖一通电话。指控的金额与书面要求无关。FINRA Rule 4530(a)(1)(B)

11 月 3 日，某公司得知其一名注册代表因重罪指控被起诉。根据 Rule 4530，公司最迟须在何时就此向 FINRA 报告？

• a.无须报告，因为只有定罪才须报告
• b.12 月 3 日，即公司得知后的 30 个日历日✓
• c.1 月 15 日，列入下一份季度统计报告
• d.12 月 13 日，即公司得知后的 40 个日历日

Rule 4530(a)(1) 要求公司在知道或应当知道关联人员因重罪被起诉、被定罪或认罪（含不抗辩）后 30 个日历日内报告。11 月 3 日加 30 个日历日为 12 月 3 日。仅起诉即足以触发，因此等到定罪再报告会错过期限。四十日不是该规则使用的期限，季度统计报告涵盖的是客户书面投诉，而不是刑事事件。FINRA Rule 4530(a)(1)

某交易商的一名市政金融专业人员（MFP）在该选区有投票权，他在初选中向一名州财政官候选人捐款 200 美元，又在大选中向同一候选人捐款 200 美元。该职位可影响交易商的遴选。MSRB Rule G-37 是否对该交易商施加两年禁令？

• a.会，因为两笔捐款合计 400 美元，超过了 250 美元
• b.不会，因为每次选举各有 250 美元的最低限额✓
• c.不会，因为该规则从不涵盖初选中的捐款
• d.会，因为向这类官员的任何捐款都会触发禁令

Rule G-37 允许有投票权的 MFP 在每次选举中向一名官员捐款最多 250 美元而不触发两年禁令，且初选与大选属于不同的选举。每笔 200 美元的捐款都在各自的限额内，因此不会产生禁令。400 美元的合计并不是判断标准，因为限额不会跨选举累加。超过最低限额的捐款确实会触发禁令，但这里并未超过，而且初选捐款属于该规则的涵盖范围，并非豁免。MSRB Rule G-37(b)

某投资顾问的一名涵盖关联人员对一名州财政官候选人没有投票权，却向其竞选活动捐款 200 美元。该职位可影响顾问的聘用。根据 SEC Rule 206(4)-5，会产生什么后果？

• a.没有后果，因为每位涵盖关联人员的限额都是 350 美元
• b.两年内不得因向该政府实体提供咨询而收取报酬✓
• c.没有后果，因为该规则只管辖顾问自身的捐款
• d.该顾问被永久禁止管理任何公共养老金资产

Rule 206(4)-5 允许涵盖关联人员向其有投票权的候选人每次选举捐款最多 350 美元，对无投票权的候选人最多 150 美元。无投票权者捐出的 200 美元超过了 150 美元的限额，因此该顾问在两年内不得因向该政府实体提供咨询服务而收取报酬。350 美元的限额不适用于无投票权者。后果是两年的暂停，而不是永久禁止，涵盖关联人员的捐款与顾问自身的捐款一样计算在内。SEC Rule 206(4)-5(b)(1)

某交易商的一名无投票权的 MFP 于 2 月 1 日向一名官员捐款 200 美元。交易商于 5 月 15 日发现该捐款，仍在捐款后四个月内。若要适用两年禁令的自动豁免，该捐款最迟须在何时退还？

• a.7 月 14 日，即发现后 60 个日历日✓
• b.6 月 14 日，即发现后 30 个日历日
• c.8 月 13 日，即发现后 90 个日历日
• d.6 月 1 日，即捐款后四个月

Rule G-37 的自动豁免适用于 250 美元以下、且交易商在捐款后四个月内发现的捐款，前提是在发现后 60 个日历日内退还。交易商于 5 月 15 日发现，仍在 2 月 1 日后四个月内，因此退还期限为 5 月 15 日后 60 个日历日，即 7 月 14 日。6 月 14 日只有 30 日，8 月 13 日则是 90 日。6 月 1 日是四个月发现期的终点，而不是退还期限。MSRB Rule G-37(j)

某交易商的一名 MFP 为一名可影响交易商遴选的市长候选人组织筹款活动。朋友们各开出 150 美元的支票捐给竞选活动，而该 MFP 本人没有出资。根据 MSRB Rule G-37，这是否被允许？

• a.不允许，且该交易商自动被禁止两年
• b.允许，因为该 MFP 本人没有出资
• c.不允许，因为 G-37(c) 禁止招揽捐款✓
• d.允许，因为每张支票都在 250 美元的最低限额内

Rule G-37(c) 禁止交易商及其 MFP 向发行人的官员招揽或协调捐款，只要该交易商正在或寻求与该发行人开展市政证券业务；250 美元的最低限额只涵盖 MFP 本人的捐款，不涵盖被招揽的捐款。因此判断标准不是 MFP 是否亲自出资，金额小的支票也不能弥补违规。该行为违反了规则，但招揽违规本身并不触发两年禁令，禁令针对的是交易商或其 MFP 超过最低限额的捐款。MSRB Rule G-37(c)

同一年内，某公司的一名注册代表在 3 月送给客户采购经理一份 180 美元的礼物，公司的交易员在 6 月又送给同一位经理一份 150 美元的礼物。这些礼物是否违反 FINRA Rule 3220？

• a.不违反，因为单独来看每份礼物都低于 300 美元
• b.不违反，因为该规则只限制以现金形式赠送的礼物
• c.不违反，因为上限针对每位赠送者分别计算
• d.违反，因为合计 330 美元，超过 300 美元的上限✓

Rule 3220 将礼物上限定为每人每年 300 美元，补充材料 .03 将公司及其所有关联人员合并计算。180 美元和 150 美元的礼物在同一年送给同一个人，合计 330 美元，超过 300 美元。单独看每份礼物，或分别看每位赠送者，都忽略了合并计算。该规则并不限于现金，而是涵盖任何有价值的东西。FINRA Rule 3220.03

某公司花 220 美元购买了两张面值合计 320 美元的球赛门票，一名代表将票送给客户的一名员工，自己并未出席比赛。这些门票是否超过 Rule 3220 的上限？

• a.未超过，因为公司的实际成本只有 220 美元
• b.未超过，因为门票属于招待，不在该规则范围内
• c.超过，因为赠送门票一律被禁止
• d.超过，因为按较高的面值 320 美元计算✓

根据补充材料 .02，赠送门票时若赠送者不与接受者一同出席，按成本与面值中较高者计价。320 美元的面值超过 300 美元，因此即使公司只花了 220 美元，礼物仍超过上限。赠送者未出席而送出的门票属于礼物而非招待，所以该规则适用。该规则并不全面禁止赠送门票，而是限制其价值。FINRA Rule 3220.02

某公司向一位在本公司开有账户的零售客户赠送了价值 500 美元的节日礼物。FINRA Rule 3220 的 300 美元上限是否禁止这样做？

• a.不禁止，因为该规则排除了公司自己的零售客户✓
• b.禁止，除非公司将其记为业务费用并予以披露
• c.禁止，因为该规则禁止一年内超过 300 美元的任何礼物
• d.不禁止，但仅因为礼物低于该规则中 1,000 美元的门槛

补充材料 .09 规定，Rule 3220 不适用于公司赠送给其自己零售客户的礼物，因此 500 美元的节日礼物不在限额之内。该规则针对的是送给其他企业员工和代表的礼物，影响力问题正出现于此。因此 300 美元的上限并不决定本案，将礼物记为费用也不会产生该规则下的任何要求。该规则没有 1,000 美元的门槛。FINRA Rule 3220.09

一名代表送给客户的一名员工一份 450 美元的婚礼礼物，公司为其报销了费用。Rule 3220 中的个人场合除外规定是否适用？

• a.适用，因为婚礼属于个人事件，所以一律被排除
• b.不适用，因为个人礼物从不排除在上限之外
• c.适用，因为生活事件中低于 500 美元的礼物被排除
• d.不适用，因为费用由公司承担，故推定与业务有关✓

补充材料 .04 将婚礼等偶发的个人生活事件的礼物排除在外，但若费用由会员公司承担，FINRA 推定该礼物与业务有关。由于公司报销了该代表的费用，该礼物被推定与业务有关，适用 300 美元的上限，450 美元已超过。婚礼并非自动排除。该规则没有 500 美元的例外，而说个人礼物从不排除则忽略了赠送者自掏腰包时适用的除外规定。FINRA Rule 3220.04

某基金发起人告知多家经纪交易商的代表，只要销售其 100 万美元的基金份额，就安排他们飞往度假胜地。FINRA 的非现金报酬规则是否允许这样做？

• a.允许，因为费用由发起人而非代表所在公司支付
• b.不允许，因为这与达到销售目标挂钩✓
• c.允许，只要代表所在公司将此事告知客户
• d.允许，只要每次旅行的价值不超过 300 美元

FINRA Rule 2341 仅允许有限形式的非现金报酬，例如每人每年 300 美元或以下、且不以销售为前提的礼物。仅因销售 100 万美元基金份额而获得的旅行以销售目标为条件，因此超出该规则允许的范围。发起人代替公司付费、每次旅行价值较小，或将此事告知客户，都不能补救这一点。FINRA Rule 2341

A broker-dealer is participating in the initial public offering of a company that has never reported under the Exchange Act. How far ahead of sending the confirmation must a copy of the preliminary prospectus be delivered to any person expected to receive it?

• a.At least 48 hours before the confirmation is sent✓
• b.At least 24 hours before the confirmation is sent
• c.At least 72 hours before the confirmation is sent
• d.At least 5 business days before the confirmation is sent

Rule 15c2-8(b) requires delivery of the preliminary prospectus at least 48 hours before the confirmation of sale is sent for an IPO of a company that is not already reporting. Other delivery periods in the securities laws, such as the dealer prospectus periods of 25, 40 or 90 days, are about different obligations.17 CFR 240.15c2-8

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

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

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

Which type of account is not subject to required minimum distributions during the original owner's lifetime?

• a.A SEP IRA
• b.A SIMPLE IRA
• c.A Roth IRA✓
• d.A traditional IRA

The IRS says required withdrawals apply to IRAs including SEP and SIMPLE IRAs and to employer plans, but not to Roth IRAs or designated Roth accounts while the owner is alive. Beneficiaries of Roth accounts are, however, subject to the RMD rules.IRC 408A(d)(1)

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

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

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

An issuer is planning a Rule 506(b) private placement. Which condition must it satisfy?

• a.It may advertise freely, but every purchaser must be an accredited investor
• b.It may sell to any number of non-accredited purchasers if each one signs a risk acknowledgment
• c.It may not use general solicitation, and it may sell to no more than 35 non-accredited purchasers in any 90-day period✓
• d.It must register the offering with the SEC but may omit the prospectus delivery requirement

Rule 506(b) is a safe harbor with no general solicitation and a cap of 35 non-accredited purchasers in any 90 days; accredited investors are not counted toward that cap. Allowing advertising is the 506(c) route, which requires all purchasers to be accredited and verified. A signed acknowledgment does not lift the 35-purchaser limit.17 CFR 230.506

A taxable money market fund has 22% of its total assets in daily liquid assets and 55% in weekly liquid assets. Under Rule 2a-7, what may it do?

• a.It may not buy anything other than a daily liquid asset until it has at least 25% in daily liquid assets✓
• b.It may buy any security, because the weekly liquid asset minimum of 30% is the only test that applies to the fund
• c.It may not buy anything at all until it has at least 50% in daily liquid assets again
• d.It may buy any security at all, because 22% daily liquid assets is above the 10% minimum

Rule 2a-7 prohibits a fund from acquiring a security other than a daily liquid asset if, afterward, it would hold less than 25% of total assets in daily liquid assets (tax-exempt funds are excepted). It likewise requires at least 50% in weekly liquid assets. The fund here meets the weekly test but falls short on the daily one.17 CFR 270.2a-7(d)(4)(ii)-(iii)

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

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

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

An equity-indexed annuity typically promises a minimum guaranteed value of what portion of the premium paid, at a low guaranteed interest rate?

• a.100% of the premium at the index return, never less than zero
• b.50% of the premium at 5 to 7 percent interest
• c.At least 87.5% of the premium at 1 to 3 percent interest✓
• d.No minimum, because the return is tied only to the index

FINRA notes that equity-indexed annuities generally offer a guaranteed minimum interest rate, typically on at least 87.5% of the premium paid at 1 to 3 percent, plus an additional rate tied to a market index. The principal is guaranteed, but the market-linked interest is not.FINRA investor education: Annuities (indexed)

Investors who bought in an offering sue because the registration statement contained a material misstatement. Which party can be held liable under Section 11 of the Securities Act?

• a.Every underwriter of the offering, subject to a due diligence defense✓
• b.Only the issuer, because it alone files the statement
• c.The investor's registered representative, because he recommended the purchase
• d.The transfer agent that recorded the new shares

Section 11 reaches those who signed the registration statement, directors, experts for the parts they prepared, and every underwriter. Everyone except the issuer can defend by showing a reasonable investigation, the due diligence defense. The issuer's liability is essentially absolute. Registered representatives and transfer agents are not listed among the Section 11 defendants.Securities Act of 1933 Section 11

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

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

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

A customer bought 300 shares of a stock this morning and, before they have been delivered to her account, enters an order to sell those 300 shares. How does Regulation SHO treat the sale?

• a.She is deemed to own the shares because she has purchased them but has not yet received them, so it can be marked long✓
• b.It must be marked short, because she does not yet have the shares in her account
• c.It must be marked short exempt, because the purchase has not yet settled
• d.It cannot be accepted, because she does not hold title

Under Rule 200(b), a person is deemed to own a security if she has purchased it, or entered into an unconditional contract binding on both parties to purchase it, even though she has not yet received it. A sale order may be marked long when the seller is deemed to own the security and it is reasonably expected to be in the firm's possession or control by settlement.17 CFR 242.200(b)

A woman inherits 100 shares that her father bought for $20 per share. The shares were worth $90 per share on the date of his death, and she sells them for $95 per share. What is her gain per share?

• a.$75, because she takes over her father's $20 cost basis and pays tax on the gain
• b.$5, because her basis is the fair market value on the date of death✓
• c.$70, because the gain is measured from the $25 gift-tax value of the shares
• d.$0, because inherited property is never taxed when sold

Property acquired from a decedent generally takes a basis equal to its fair market value at the date of death. Her basis is therefore $90, not her father's $20, and her gain is $95 minus $90, or $5 per share. The step-up removes the appreciation that occurred during her father's lifetime from taxable gain.26 U.S.C. 1014(a)

A cash account customer buys and sells the same shares before paying. Within the payment period the customer's check clears, and the sale proceeds were not withdrawn before then. What happens to the 90-day freeze?

• a.It does not apply, because full payment cleared and the proceeds were not withdrawn first✓
• b.It applies in full for 90 calendar days, because the stock was sold before it was paid for
• c.It applies for 30 calendar days instead of 90, because the customer later paid in full
• d.It applies only if the customer uses a second broker-dealer to complete the sale of the stock

The 90-day freeze does not apply if, within the payment period, full payment is received or a check in payment has cleared and the sale proceeds were not withdrawn before the payment or clearance. The freeze targets selling before paying, not a timely payment.12 CFR 220.8(c)(2)(i)

A client wants to buy a nonqualified annuity with after-tax savings. Which statement is correct?

• a.She can deduct up to $7,500 a year, like an IRA, since the contribution lowers her taxable income
• b.She cannot deduct the contribution, but there is no annual contribution limit on the annuity itself✓
• c.She is limited to the 401(k) deferral limit, because every annuity contribution counts toward that cap
• d.She can deduct the contribution only if she annuitizes within one year

Investments in nonqualified annuities are made with after-tax dollars, so the contributions are not deductible. Unlike IRAs and 401(k) plans, annuities don't have annual contribution limits, although an annuity held in a qualified plan is subject to that plan's limits.FINRA investor education: Annuities (taxes)

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

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

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

Regulation M Rule 105 restricts short selling before certain follow-on offerings. A person who sold the security short may not buy it in the offering if the short sale occurred during what restricted period?

• a.The 30 days before the registration statement is filed
• b.The shorter of the five business days before pricing or the period from the registration filing to pricing✓
• c.The 10 business days before the offering becomes effective
• d.The 90 calendar days before the first closing

Rule 105 prohibits buying offered securities from an underwriter, broker or dealer if the buyer sold short during the restricted period. That period is the shorter of the five business days before pricing, or the time from initial filing of the registration statement to pricing. The intent is to prevent depressing the market to get a lower offering price.17 CFR 242.105

A retail investor sells a gold coin collection, held for four years, at a net gain. What is the maximum federal rate on that net long-term capital gain, according to the IRS?

• a.15%
• b.28%✓
• c.20%
• d.The investor's ordinary income rate, with no cap

The IRS states that net capital gains from selling collectibles such as coins or art are taxed at a maximum 28% rate. Most other long-term gains are taxed at lower rates of 0%, 15% or 20%.IRS Topic 409

A foreign issuer sells securities offshore under Regulation S Category 2 or 3 restrictions. What does the 40-day distribution compliance period generally restrict?

• a.Offers and sales to U.S. persons, other than distributors, during the period✓
• b.Any sale to a person located outside the United States, including one made by a distributor
• c.Any resale after the period by the original purchaser to another person in the market
• d.Any advertising of the issuer's products or services in overseas markets or media

Regulation S offers and sales made outside the United States can qualify for the safe harbor if offering restrictions are in place and, where a 40-day distribution compliance period applies, the offer or sale before the period expires is not made to a U.S. person or for a U.S. person's account, other than a distributor. The period does not bar sales to people outside the U.S.17 CFR 230.903(b)

A mutual fund has adopted a Rule 12b-1 plan with an asset-based sales charge and also pays service fees. What limits its total front-end, deferred and asset-based sales charges under FINRA Rule 2341?

• a.8.5% of total new gross sales
• b.3% of total new gross sales
• c.No cap, because shareholders approved the plan
• d.6.25% of total new gross sales plus interest charges, with a 6.25% cap on any one transaction✓

For funds with an asset-based sales charge that pay service fees, Rule 2341 caps the aggregate of those charges at 6.25% of total new gross sales plus interest at the prime rate plus 1%. Any single front-end or deferred charge cannot exceed 6.25% of the amount invested.FINRA Rule 2341(d)(2)(A)

A 401(k) participant turned 73 this year but is still working for the plan sponsor, and the plan allows delayed required minimum distributions until retirement. When is the first RMD generally due?

• a.April 1 following the year she turns 73, whether or not she is still working
• b.December 31 of the year she turns 73
• c.April 1 following the year she turns 70 1/2
• d.April 1 following the later of the year she turns 73 or the year she retires✓

For a 401(k), profit-sharing or other defined contribution plan, the IRS sets the required beginning date as April 1 following the later of the year the participant reaches age 73 or retires, if the plan allows delaying until retirement. For IRAs the date is April 1 after the year the owner turns 73, with no retirement delay.IRC 401(a)(9)

Under Regulation SHO Rule 201, a stock falls 11% from the prior day's close and the short-sale circuit breaker is triggered. For how long do the short-sale price restrictions stay in effect?

• a.For the remainder of that day and the following day✓
• b.For one hour after the decline occurs, with no limit on the types of orders
• c.For the remainder of that day only, and trading resumes the next morning
• d.For the next five trading days following the decline in the price

Rule 201 applies when a covered security's price falls 10% or more from the prior day's closing price. The restriction then requires short sales to be priced above the national best bid and remains in force for the rest of that day and the following day. It is not limited to a single session, and it does not last a week.17 CFR 242.201(b)

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

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

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

A company issues convertible securities whose conversion price floats with the market, so a falling stock price means more shares are issued at conversion. What is the principal risk for existing shareholders?

• a.Dilution that can deepen as the price falls, sometimes called a death spiral✓
• b.Loss of voting rights for all common stockholders as soon as the first conversion takes place
• c.Mandatory conversion of the existing common stock into debt owed to the new lenders of the company
• d.A guaranteed increase in earnings per share, because the company has more shares to spread costs over

With a market-price-based conversion formula, lower prices mean more shares are issued, which dilutes existing holders and can push the stock price down further. Such deals are colloquially called floorless, toxic, death spiral or ratchet convertibles. A fixed conversion price is the conventional structure.SEC Investor.gov, Convertible Securities

On June 10 an investor sells 200 shares of ABC at a loss. On June 25 she buys call options on ABC. How does the wash sale rule treat the loss?

• a.The loss is disallowed, because acquiring an option to buy substantially identical stock within 30 days counts as a repurchase✓
• b.The loss is allowed, because options are not stock
• c.The loss is allowed, because the options were bought after 10 days
• d.The loss is disallowed only if she exercises the options within 30 days

The wash sale rule disallows a loss when, in the period beginning 30 days before and ending 30 days after the sale, the taxpayer acquires, or enters into a contract or option to acquire, substantially identical stock or securities. Buying call options on the same stock within that window triggers it.IRC 1091(a)

Which approval does Rule 12b-1 require before an open-end fund may pay distribution expenses from fund assets under a plan?

• a.Approval by a simple majority of the fund's transfer agents
• b.Approval by the fund's investment adviser alone
• c.Approval by the full board and by the directors who are not interested persons, voted in person at a meeting called for that purpose✓
• d.Approval by the SEC staff after a public comment period

A Rule 12b-1 plan must be approved by the board of directors and also by the directors who are not interested persons and have no financial interest in the plan, cast in person at a meeting called for the purpose. The plan continues beyond one year only if approved at least annually, and the board must review written reports of expenditures at least quarterly.17 CFR 270.12b-1(b)

A retail broker-dealer sells shares of a load mutual fund to an individual customer. At what price may the dealer sell under Section 22(d) of the Investment Company Act?

• a.Any price the dealer and the customer negotiate between themselves at the time of sale
• b.The current public offering price described in the prospectus✓
• c.The net asset value less the dealer's discount, as stated in the prospectus
• d.The price the dealer paid for the shares in the market, plus a markup of up to 5%

Section 22(d) bars a dealer from selling a fund share to anyone other than another dealer, the principal underwriter or the issuer except at the current public offering price described in the prospectus. This keeps the price uniform; negotiating a different price breaches the section.15 U.S.C. 80a-22(d)

An actively managed fund has management and administrative fees of 1.5% of assets, and its benchmark returns 9%. What return must the manager's portfolio earn before fees to beat the benchmark?

• a.More than 10.5%✓
• b.More than 9.0%
• c.More than 7.5%
• d.More than 13.5%

Fees reduce what shareholders keep, so a fund charging 1.5% must earn more than the benchmark's 9% plus 1.5%, or 10.5%, before fees to beat it. That handicap is a reason many investors choose lower-cost index funds.FINRA investor education: Mutual funds

A 45-year-old with $100,000 of adjusted gross income (AGI) has $14,000 of unreimbursed medical expenses and takes an IRA distribution to pay them. The 10% additional tax exception for unreimbursed medical expenses applies to which portion?

• a.All $14,000, because the expenses are for medical care
• b.The part above 10% of AGI, which is $4,000
• c.The part of the expenses above 7.5% of AGI, which is $6,500✓
• d.Nothing, because medical expenses are never an exception before age 59 1/2

The IRS exception covers unreimbursed medical expenses only to the extent they exceed 7.5% of AGI. Here 7.5% of $100,000 is $7,500, so $14,000 minus $7,500 leaves $6,500 that can be withdrawn without the 10% additional tax. The distribution is still subject to regular income tax.IRC 72(t)(2)(B)

A 66-year-old owner of a deferred annuity annuitizes it for a lifetime payout. What should her representative tell her about this decision?

• a.She can reverse it within 3 years and return to the accumulation phase
• b.She keeps the right to withdraw any lump sum on demand
• c.She can change the payout option each year without charge
• d.It is generally irrevocable, because she gives up control of the investment in return for guaranteed income✓

The decision to annuitize is generally irrevocable. The owner gives up control of the investment to the insurer in exchange for a steady income stream, and the insurer takes on the risk that she will outlive her money. Systematic withdrawals or a lump sum keep control but forfeit the guarantee.FINRA investor education: Annuities (payout)

An investor holds a registered index-linked annuity with a 10% buffer. The index it tracks falls 15% over the term. What loss does the investor absorb?

• a.15%, because a buffer protects only against gains being capped and never limits losses
• b.10%, because the buffer is the amount of loss the investor must absorb first
• c.5%, because the insurer absorbs the first 10% of the index decline✓
• d.0%, because registered index-linked annuities guarantee principal

In a registered index-linked annuity, a buffer is the percentage loss of the index that the insurance company absorbs before the investor absorbs anything. With a 10% buffer and a 15% index decline, the investor bears the 5% beyond the buffer. Buffers often come with caps on the gains the investor can earn.FINRA investor education: Annuities (RILAs)

An individual is convicted of willfully violating the Securities Exchange Act of 1934. What is the maximum criminal penalty for a natural person under Section 32(a)?

• a.A fine of up to $25,000,000 and no prison term
• b.A fine of up to $100,000 or imprisonment of up to one year
• c.A fine of up to $5,000,000, imprisonment of up to 20 years, or both✓
• d.Only a civil penalty, because criminal penalties apply to firms and not individuals

Section 32(a) provides that a person who willfully violates the Exchange Act or its rules may be fined up to $5,000,000, imprisoned up to 20 years, or both; if the offender is not a natural person, the fine can reach $25,000,000. The larger fine applies to firms and other entities, not to an individual.Exchange Act Section 32(a) (15 U.S.C. 78ff(a))

A mutual fund has no asset-based sales charge but pays a service fee. Under FINRA Rule 2341, what is the maximum aggregate sales charge it may impose?

• a.8.5% of the offering price
• b.6.25% of the offering price
• c.7.25% of the offering price✓
• d.9.0% of the offering price

FINRA Rule 2341(d)(1)(D) caps the aggregate sales charge of an investment company with no asset-based sales charge that pays a service fee at 7.25% of the offering price. A fund with neither a service fee nor an asset-based charge may go as high as 8.5% if it offers quantity discounts, and a fund with an asset-based sales charge and service fees is capped at 6.25% of gross sales.FINRA Rule 2341(d)(1)(D)

An underwriting syndicate is stabilizing the market for a newly offered stock. Which limit applies to its stabilizing bid?

• a.It may not be higher than the lower of the offering price or the stabilizing bid in the principal market✓
• b.It may be set at any price up to 10% above the offering price if the manager approves it
• c.It may be set at the public offering price or higher, to signal confidence in the issue to buyers and dealers
• d.It may be set at any price if the syndicate discloses the bid in a footnote on confirmations sent to buyers

Under Rule 104 stabilizing is meant only to prevent or slow a decline, so a bid may not exceed the lower of the offering price or the stabilizing bid in the principal market. Stabilizing is also prohibited in an at-the-market offering. A bid above the offering price would push the price up, which is manipulation rather than stabilization.17 CFR 242.104

A person trades on material nonpublic information. Who may bring a private action for damages under Section 20A of the Securities Exchange Act of 1934?

• a.Only the SEC, because Section 20A creates no private right of action for traders who were on the other side
• b.Only the issuer's shareholders of record on the first day of the year in which the violation happened
• c.Only customers of the violator's own broker-dealer who held the security during the trading day in question
• d.Anyone who traded the same class of securities on the opposite side at the same time as the violator✓

Section 20A gives a private right of action to any person who, contemporaneously with the unlawful purchase or sale, sold or bought securities of the same class on the other side of the trade. Damages are capped at the profit gained or loss avoided, and an action must be brought within five years of the last transaction.Exchange Act Section 20A (15 U.S.C. 78t-1)

Under Regulation A, what is the maximum amount a company may raise in a 12-month period in a Tier 2 offering?

• a.$75 million✓
• b.$20 million
• c.$50 million
• d.$10 million

Regulation A Tier 2 allows offerings of up to $75,000,000 in 12 months, with no more than $22.5 million offered by selling security holders who are affiliates. Tier 1 is capped at $20,000,000. The Rule 504 exemption under Regulation D has a separate $10 million cap, which is the usual source of confusion.17 CFR 230.251

A cash account customer buys $3,000 of stock, then cancels the purchase before paying in order to fix a clerical error made by the firm. How does Regulation T treat the cancellation for the 90-day freeze?

• a.Any cancellation is a sale, so the freeze starts at once
• b.It is a sale, but the freeze is shortened to 30 days
• c.It is a sale only if the amount exceeds $1,000
• d.A cancellation to correct an error is not treated as a sale, so the freeze is not triggered by it✓

Regulation T treats cancellation of a transaction as a sale for purposes of the 90-day freeze, but not when the cancellation is made to correct an error. A cancellation to fix a genuine error therefore does not by itself trigger the freeze.12 CFR 220.8(c)(1)

A dealer sells 50 corporate bonds from its inventory to a retail customer. On the same day, it bought 100 of the same bonds in an offsetting trade. What must the customer's confirmation show?

• a.The dealer's mark-up as a total dollar amount and as a percentage of the prevailing market price✓
• b.Only the net price, because the dealer acted as principal and no markup disclosure is required then
• c.The dealer's mark-up only if the customer asks for it in writing within thirty days of the trade date
• d.The dealer's mark-up as a percentage only, with no dollar amount, shown on the customer's confirmation

FINRA Rule 2232(c) requires a confirmation to include the mark-up or mark-down, as a total dollar amount and as a percentage of the prevailing market price, when a member trades as principal in a corporate or agency debt security with a non-institutional customer and has offsetting trades in at least the same size on the same trading day. Neither a customer request nor a net-price confirmation is the test.FINRA Rule 2232(c)

A public employee takes an early distribution, before age 59 1/2, from his governmental 457(b) plan balance that came entirely from his own salary deferrals. What is the 10% additional tax treatment?

• a.The 10% additional tax applies to the full distribution, including the amount that was deferred from his pay
• b.The distribution is fully tax-free to him if he is separated from service in or after the year he turns 55
• c.The distribution is taxed at 25% like a SIMPLE IRA's first two years, with no exceptions for the plan
• d.The 10% additional tax does not apply to the deferral portion, though income tax is still due✓

The IRS states that distributions from a governmental 457(b) plan are not subject to the 10% additional tax, except for amounts attributable to rollovers from another type of plan or IRA. Ordinary income tax still applies to pre-tax money withdrawn.IRC 457(b)