Series 7 Critical Facts

Important Material To Know For Series 7

A registered representative must obtain PRIOR WRITTEN AUTHORIZATION from a customer before handling a DISCRETIONARY ACCOUNT

Prior Written Authorization

In order for an RR to share in the profits and losses in a customer’s account, they must obtain prior written authorization of their employing member and obtain prior written authorization of the customer

Prior Written Authorization

At or before the completion of the transaction

Provide Customer Confirmations

Before executing an order, the RR must receive a SIGNED COPY of the suitability determination from the customer for PENNY STOCKS

Prior to Executing an Order

Settlement of CASH TRADES before 2:30 PM EST

Same Day At The Trade Date

All Executed transactions need to be reported within 10 seconds of execution

10 Seconds

Real-Time Reporting System (RTRS) states that Broker-Dealers must report transactions effected in municipal securities within 15 MINUTES of execution of a transaction

15 Minutes

When a broker-dealer receives a PROXY for a customer’s security held in street name, the broker-dealer must send the proxy to the customer promptly

Promptly

Mutual Funds shares are ISSUED AND REDEEMED DAILY

Daily

Money Market Funds CREDIT DIVIDENDS to customer accounts DAILY, but pay them out MONTHLY

Daily

LEVERAGED AND INVERSE ETFS are reset or rebalanced daily

Daily

SHORT SALES in a margin account are MARKED TO MARKET daily

Daily

Market Makers must report TRADING VOLUME DAILY

Daily

Under Automated Customer Account Transfer Service (ACATS), when the carrying firm receives a request from the receiving firm, the CARRYING FIRM must VALIDATE the request within 1 BUSINESS DAY, and the transfer must be completed within 3 BUSINESS DAYS

1 Business Day

Settlement or Regular Way Trades of U.S. GOVERNMENTS in the secondary market

1 Business Day After The Trade Date (T +1)

Options - Equity, Currency, Index & Interest Rate

1 Business Day After The Trade Date (T+1)

REGULAR WAY settlement of COMMON STOCK, PREFERRED STOCK, CORPORATE & MUNICIPAL BONDS, MUTUAL FUNDS, AND ETFS

1 Business Day After The Trade Date (T + 1)

Settlement of EXERCISED EQUITY OPTIONS

1 Business Day After The Trade Date (T + 1)

When entering a “SELL LONG” for a customer, the RR must have reasonable assurance as to the location of the securities, and the customer must be able to deliver the securities within 1 business day

1 Business Day After The Trade Date (T + 1)

MARGIN DEFICIENCIES in a portfolio margin account must be met within 3 business days

1. If margin requirements or margin shortfalls are NOT MET within 3 business days, no new orders are allowed to be entered and PROMPT LIQUIDATION WILL OCCUR.

3 Business Days

A Fund must send within 3 business days after receiving a request by an investor: a paper copy of the Fund’s Statutory Prospectus, Statement of Additional Information, and the most recent annual and semiannual reports to shareholders

3 Business Days

Regarding imposition of Quiet Periods:

No member may publish a research report regarding a subject company for which the member acted as manager or co-manager of:

1. An IPO for 10 CALENDAR DAYS following the date of the offering
   OR

2. Secondary offering for 3 CALENDAR DAYS following the date of the offering.

3 Calendar Days

REGULATION T requires that payment in full be made in a cash account or that 50% of the purchase price (or appropriate initial requirement) be paid in a margin account

3 Business Days After The Trade Date (T + 3)

Investors are limited to the NUMBER OF LISTED OPTION CONTRACTS WHICH MAY BE EXERCISED within any consecutive 5 business day period

5 Business Days

Under the Customer Identification Program (CIP), firms must verify the NEW ACCOUNT REPORT INFORMATION for a cash account within 5 BUSINESS DAYS

5 Business Days

Pattern Day Traders are customers who execute FOUR OR MORE DAY TRADES WITHIN 5 BUSINESS DAYS

5 Business Days

Time allowed for a mutual fund to pay customers who have redeemed shares

7 Calendar Days

All parties must give up their compensation if an investor tenders a mutual fund or variable annuity for redemption within 7 BUSINESS DAYS OF THE PURCHASE DATE

7 Business Days

The time allowed beyond the regular way settlement date for a seller to DELIVER the securities sold before a BUY IN must occur per SEC Rule 15c3-3.

10 Business Days

Under FINRA Code of Arbitration Procedure; Upon request of the customer, it is the maximum amount of time a member firm has to provide a COPY OF THEIR CUSTOMER’S PRE-DISPUTE ARBITRATION AGREEMENT

10 Business Days

All Advertisements for listed OPTIONS must be filed with FINRA PRIOR TO FIRST USE

10 Calendar Days

Regarding imposition of Quiet Periods:

No member may publish a research report regarding a subject company for which the member acted as manager or co-manager of:

1. An IPO for 10 CALENDAR DAYS following the date of the offering, or

2. Secondary offering for 3 CALENDAR DAYS following the date of the offering.

10 Calendar Days

The time allowed to obtain a signed OPTION ACCOUNT AGREEMENT from a customer after the account is approved for options trading.

1. If the agreement is not returned within 15 calendar days, ONLY LIQUIDATING (CLOSING) TRANSACTIONS can occur

15 Calendar Days

The required BACKGROUND AND FINANCIAL INFORMATION must be sent to the customer for verification within 15 CALENDAR DAYS after the customer has been approved for options trading.

1. If the customer does not respond to the request for verification and/or correction, the firm may consider the info to be verified

15 Calendar Days

The minimum time or “COOLING PERIOD” after a registration statement has been filed with the SEC BEFORE THE NEW ISSUE CAN BECOME “EFFECTIVE.”

20 Calendar Days

Under the FINRA Code of Arbitration, it is the minimum amount of time that parties in arbitration are required to exchange documents prior to the hearing if they intend to present

20 Calendar Days

VIX Options expire on the WEDNESDAY THAT IS 30 DAYS PRIOR TO THE THIRD FRIDAY OF THE CALENDAR EXPIRATION MONTH IMMEDIATELY FOLLOWING THE EXPIRING MONTH

30 Days (Monthly)

INDEX OPTIONS trade and expire on a MONTHLY BASIS. For most index options, the expiration date is the third Friday of the expiration month

30 Days (Monthly)

OPTIONS CORRESPONDENCE does not need to be approved by an ROP unless it is sent to MORE THAN 25 RETAIL CLIENTS within a 30-day period and makes a recommendation or promotes services of the firm

30 Days (Monthly)

FULLY PAID MUTUAL FUND SHARES may be used as collateral for other purchases on margin if shares have been fully paid for at least 30 days.

30 Days (Monthly)

Time during which a NEW ISSUE IS NOT MARGINABLE for customers of firms who were syndicate members

30 Days (Monthly)

Customer Account Information must be sent to the customer within 30 DAYS of the OPENING of the account

30 Days (Monthly)

Customer account information must be updated within 30 days after receiving notice of a CHANGE in the customer’s INVESTMENT OBJECTIVES

30 Days (Monthly)

The member firm must report the termination of a registered person to FINRA in writing within 30 DAYS through means of a U5 Form

30 Days (Monthly)

Number of DAYS PER MONTH used when calculating accrued interest for CORPORATE AND MUNICIPAL BONDS. (Actual days of the month are used for U.S. Government Bonds)

30 Calendar Days

The number of days BEFORE OR AFTER THE SALE of a security AT A LOSS where the loss will be DISALLOWED for tax purposes if a “substantially identical” security is purchased. (Wash Sale)

30 Calendar Days

UNDER REGULATION S, non-convertible debt securities may not be resold in the U.S. for 40 days

40 Days

Maximum time to complete a tax-free IRA ROLLOVER

60 Days

The “LOCK IN” period imposed on purchasers of a new issue under a STANDBY AGREEMENT before the new issue shares can be sold.

3 Months

If the time period for holding mail for a customer who is traveling exceeds 3 months, the instructions from the customer MUST INCLUDE AN ACCEPTABLE REASON FOR THE REQUEST

3 Months

The prospectus delivery requirements apply to broker-dealers that participate in the distribution of a new issue and then become market makers in the issue for 90 DAYS from the effective date of the registration statement

90 Days

The time that a cash account is “FROZEN” for non-payment

90 Days

PERSONS IN ARMED FORCES: If a person who was previously registered but is no longer registered and is within 2 years of the date of termination, FINRA will defer the lapse of registration. The deferral will terminate 90 DAYS following the person’s completion of active service, or re-registration, whichever occurs first

90 Days

The time that a LETTER OF INTENT (LOI) for a mutual fund purchase may be BACKDATED

90 Calendar Days

The effective period from the time of filing SEC Form 144, A Notice of Sale, TO SELL RESTRICTED STOCK to the public. Sales in any 90-day period are limited to either 1% of the outstanding stock or the average trading volume for the previous four weeks, whichever is greater

90 Calendar Days

The frequency with which broker/dealers must send ACCOUNT STATEMENTS to their customers

Quarterly

Frequency of DIVIDEND PAYMENTS declared on common and preferred stock

Quarterly

Broker-Dealers must inform customers of any FREE CREDIT BALANCES left with the firm at least QUARTERLY

Quarterly

The frequency with which INVESTMENT COMPANIES must send reports to SHAREHOLDERS

Semi-Annually

The frequency with which INTEREST ON BONDS IS PAID

Semi-Annually

FINRA member firms must send a statement of the firm’s financial condition to their customers SEMI-ANNUALLY

Semi-Annually

Under SEC Rule 144, it is the length of time that an investor must own and hold fully paid RESTRICTED STOCK BEFORE THE STOCK CAN BE SOLD

6 Months

Under SEC Rule 144-A and during the six-month restricted period, Rule 144-A allows for the sale of RESTRICTED SECURITIES (unregistered) to QUALIFIED INSTITUTIONAL BUYERS (QIBs)

6 Months

Under Rule 147, it is the time during which shares of an INTRASTATE OFFERING may only be sold to other legal residents of the same state as that of the issuer

6 Months

A SHORT COUPON PAYMENT on a bond would be for less than 6 months

6 Months

A LONG COUPON PAYMENT on a bond would be for more than 6 months

6 Months

The maximum maturity date of COMMERCIAL PAPER

270 Days

The maximum expiration time for a STANDARDIZED or TRADITIONAL option contact

9 Months

SHORT TERM HOLDING PERIOD for any capital asset held UP TO AND INCLUDING ONE YEAR

12 Months or Less

The maximum length of time that money market instruments mature

12 Months or Less

Mutual Funds must continuously offer a PROSPECTUS which must be updated AT LEAST ANNUALLY

Annually (12 Months/1 Year)

A member firm may not sell a new issue of common stock to any account unless, WITHIN THE LAST 12 MONTHS, it has in good faith obtained verification that the account is eligible to purchase the new issue

Annually (12 Months/1 Year)

Publicly held corporations must provide ANNUAL REPORTS to shareholders

Annually (12 Months/1 Year)

Equity Securities classified as restricted under Rule 144 and sold under REGULATION S may not be resold in the U.S. and must satisfy a “Distribution Compliance Period” of 1 YEAR

Annually (12 Months/1 Year)

At least annually, member firms must evaluate training needs and develop a training plan which includes the scope of the firm’s business activities

Annually (12 Months/1 Year)

At least annually, the member firm must provide the FINRA BROKERCHECK DISCLOSURE HOTLINE PHONE NUMBER, THE FINRAL REGULATION WEBSITE ADDRESS, and a statement as to the AVAILABILITY OF THE INVESTOR BROCHURE to customers.

Annually (12 Months/1 Year)

Member firms are required to establish and maintain with ANNUAL UPDATES, A BUSINESS CONTINUITY PLAN

Annually (12 Months/1 Year)

Each member firm’s CEO must certify annually that the member has in place COMPLIANCE POLICIES AND PROCEDURES to comply with FINRA rules and applicable securities laws and regulations

Annually (12 Months/1 Year)

Offices of Supervisory Jurisdiction (OSJs) must be inspected annually.

Annually (12 Months/1 Year)

All registered personnel, including RRs and principals, must participate in an Annual Compliance Review

Annually (12 Months/1 Year)

LONG-TERM HOLDING PERIOD for any capital asset held for 1 YEAR AND 1 DAY OR LONGER

12 Months + 1 Day

The life of a LETTER OF INTENT for the purchase of mutual fund shares

13 Months

Mutual Fund prospectuses cannot be used if the information is more than 16 months old

16 Months

Under the Cold Calling Act, a PRIOR BUSINESS RELATIONSHIP is defined as the person contacted has an account with the person making the call and there has been some form of activity in the account during the last 18 months

18 Months

PREVIOUSLY-REGISTERED PERSONS returning to the industry will have to re-take exams after 2 years has elapsed.

2 Years

FINRA has jurisdiction to bring DISCIPLINARY ACTIONS against member firms and associated persons for 2 YEARS following the resignation, termination, cancellation, or revocation of their membership

2 Years

The length of time a SHELF REGISTRATION statement must be kept on file with SEC

3 Years (36 Months)

Options Communications must be retained for 3 YEARS

3 Years (36 Months)

Customer Account Information must be furnished to each customer AT LEAST ONCE EVERY 36 MONTHS

3 Years (36 Months)

According to the Taping Rules, all tape recordings must be maintained for a period of 3 YEARS from the date that the tape was created, the first 2 years in a readily accessible location

3 Years (36 Months)

All approved ADVERTISEMENTS, SALES LITERATURE, AND INDEPENDENTLY PREPARED REPRINTS must be kept in a separate file for 3 YEARS FROM THE LAST USE

3 Years (36 Months)

Repurchase Agreements records must be kept for 3 years.

3 Years (36 Months)

The time for which records must be maintained under SEC Rules (The first two years in readily accessible location)

1. U4 Forms and U5 Applications for Employment with a broker-dealer

2. Fingerprints for all persons associated with a broker-dealer, transfer agent, or clearing firm

3. Customer Confirmations

4. Copies of orders given or received on behalf of the broker-dealer or customers

5. Names and addresses of beneficial owners of all accounts

3 Years (36 Months)

All Written OPTIONS COMPLAINTS must be RETAINED for this period

4 Years

Customer complaints must be maintained for 4 years at the OSJ, the first two years in a readily accessible location.

4 Years

The Securities Industry Essentials (SIE) exam must be passed within 4 YEARS prior to passing the specialized knowledge licensing exam

4 Years

MSRP rules require maintenance of records of correspondence, advertisements, sales literature, and confirmations for 4 years

4 Years

Monetary instrument sales records must be kept for 5 years and must be available upon request

5 Years

Under Customer Identification Program (CIP), CUSTOMER IDENTIFICATION information must be retained for 5 YEARS after an account is closed

5 Years

The maximum time from the date of the event to file for ARBITRATION

6 Years