unit 17 Qbank quizzes

C)

establishing Regulation T initial margin requirements.

• The initial margin requirement is set by the Federal Reserve under Regulation T. FINRA does have an initial margin requirement ($2,000 or 100%), but this is under its authority as an SRO, not the federal reserve. FINRA also creates and administers securities licensing requirements (e.g., the SIE), sets its own membership requirements, and may investigate complaints from customers.

The authorities delegated to FINRA by the SEC include all of these except

A)

investigating complaints.

B)

establishing testing and standards for associates of broker-dealers.

C)

establishing Regulation T initial margin requirements.

D)

establishing membership requirements.

A)

The Department of Enforcement

• The Department of Enforcement investigates and holds hearings on violations under the Code of Procedure.

Which of the following is not a FINRA rules set?

A)

The Department of Enforcement

B)

The Code of Procedure

C)

The Code of Arbitration

D)

The Uniform Practice Code

D)

capital requirements for OTC securities.

• Exchanges have no authority over securities that do not trade on that exchange.

Exchanges may establish rules for all of the following except

A)

order priority.

B)

capital requirements for members.

C)

listing and delisting of a security.

D)

capital requirements for OTC securities.

A)

the Securities and Exchange Commission (SEC).

• Any entity such as a broker-dealer intending to do business with other broker-dealers or customers involving securities must be registered with the SEC.

Broker-dealers who transact securities business with other broker-dealers or customers must be registered with

A)

the Securities and Exchange Commission (SEC).

B)

the Federal Reserve Board (FRB).

C)

the Financial Industry Regulatory Authority (FINRA).

D)

the Options Clearing Corporation (OCC).

C)

the SEC.

• All SROs, including FINRA, the MSRB, and all listed exchanges, are accountable to the Securities and Exchange Commission (SEC). The SEC is the securities industry's primary government body, not an SRO.

All of the following are self-regulatory organizations (SROs) in the securities industry that are accountable for creating industry rules, as well as supervising securities practices within an assigned jurisdiction, except

A)

FINRA.

B)

the MSRB.

C)

the SEC.

D)

the CBOE.

D)

Customer ledgers (statements)

• Customer ledgers, from which account statements are prepared, must be kept on file or in appropriate electronic form for six years. Minute books and Form BD and its amendments are kept for the life of the firm. Confirmations and order tickets are kept for three years.

Which of the following records must be maintained for six years?

A)

Organizational amendments shown on Form BD

B)

Customer confirmations and order tickets

C)

Minute books of directors meetings

D)

Customer ledgers (statements)

D)

MSRB

• The MSRB relies on FINRA and the SEC to enforce its rules for broker-dealers, and banking regulators to enforce their rules for banks.

Which of the following cannot enforce their own rules?

A)

CBOE

B)

SEC

C)

FINRA

D)

MSRB

A)

communications with the public.

• The UPC established uniform trade practices and other guidelines for broker-dealers to follow when they do business with other member firms, including transaction settlement, good delivery, ex-dates, trade confirmations, and DK procedures.

The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following except

A)

communications with the public.

B)

don't know (DK) procedures.

C)

good-delivery procedures.

D)

settlement and ex-dates.

B)

the MSRB Enforcement Department.

• MSRB has no enforcement department. FINRA and the SEC enforce MSRB rules for broker-dealers, and the Fed and the Office of the comptroller do so for banks.

All of these enforce MSRB rules except

A)

FINRA.

B)

the MSRB Enforcement Department.

C)

the Securities Exchange Commission.

D)

the Federal Reserve Board.

A)

indefinitely.

• These records are kept for the life of the company.

Amendments to articles of incorporation are kept

A)

indefinitely.

B)

for 10 years.

C)

for three years.

D)

for six years.

B)

I only

• U4 forms must be kept for three years after the rep terminates, so if the rep worked for the firm 30 years, the form would have to be kept for 33 years. All others are three-year records.

Which of the following items are required to be kept more than three years?

1. U4 forms

2. U5 forms

3. Customer order tickets

4. Customer confirmations

A)

II and III

B)

I only

C)

III and IV

D)

I and IV

C)

must comply with the request promptly.

• Prompt compliance with regulatory requests is required. By becoming a member, or registering with regulators, a broker-dealer agrees to provide documents and other evidence on request.

When responding to regulatory requests for documents a broker-dealer

A)

need not comply unless they are convinced of good cause.

B)

must comply with the request within three months.

C)

must comply with the request promptly.

D)

may request a court hearing.

D)

Jail sentence for an associated person of the firm

• A jail sentence is not within the jurisdictional powers of FINRA. However, censure (generally meant to mean public disclosure), fines, suspension of the membership of a member or suspension of the registration of an associated person for a definite period, expulsion of the member (canceling the membership of the member), and the barring of an associated person from association with all members (essentially barring one from the industry) are all sanctions under FINRA's Code of Procedure. Additionally, imposition of any other fitting sanction is specified. However, this would not include criminal penalties such as a jail sentence.

Under Financial Industry Regulatory Authority (FINRA)'s Code of Procedure, which of the following is not a sanction that could be imposed against a firm or registered person?

A)

Monetary fine for a firm, principal or registered representative

B)

The barring of an associated person from the industry

C)

Suspension of FINRA membership

D)

Jail sentence for an associated person of the firm

D)

none of these.

• Complaints are kept for four years after resolution.

Written complaints are kept for

A)

six years.

B)

10 years.

C)

three years.

D)

none of these.

C)

Establishing minimum and maximum stock prices for publicly traded companies

• The markets, not a regulator, sets the prices of securities. FINRA creates and administers securities licensing requirements (e.g., the SIE), sets its own membership requirements, and may investigate complaints from customers.

FINRA's authority does not include which of the following?

A)

Establishing testing and standards for associates of broker-dealers

B)

Investigating complaints

C)

Establishing minimum and maximum stock prices for publicly traded companies

D)

Establishing membership requirements