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Question 1 of 10
1. Question
For the compliance with SEA Rule 17a-5(f)(2), which date format must be applied in an engagement date of July 1, 2021?
Correct
Errors in filling the form may arise due to small details, such as the date format. In FINRA Firm Gateway, MM/DD/YY format must be applied. A new template is available on FINRA Firm Gateway to comply with the Exchanges Act of 1934.
Incorrect
Errors in filling the form may arise due to small details, such as the date format. In FINRA Firm Gateway, MM/DD/YY format must be applied. A new template is available on FINRA Firm Gateway to comply with the Exchanges Act of 1934.
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Question 2 of 10
2. Question
Which of the following is correct in filing an annual report by the broker or dealer in accordance with SEA Rule 17a-5?
I. A broker or dealer must attach an oath or affirmation that the financial report is true and correct.
II. A broker or dealer may not be engaged with an independent public accountant in providing the annual reports.
III. A broker or dealer’s report must always be covered by an independent public accountant to verify its reliability.
IV. A broker or dealer may independently file an annual report providing an oath or affirmation of not having any proprietary interest in any accounts of a customer.Correct
Under the SEA Rule 17a-5, a broker or dealer is not required to be engaged in an independent public accountant in filing an annual report. A broker or dealer must attach an oath or affirmation that the financial report is true and correct and that he, in any way, has no proprietary interest on the customer’s account. The reliability of an annual report is based on how relevant the report is regardless if an independent public accountant or a broker or dealer filed it.
Incorrect
Under the SEA Rule 17a-5, a broker or dealer is not required to be engaged in an independent public accountant in filing an annual report. A broker or dealer must attach an oath or affirmation that the financial report is true and correct and that he, in any way, has no proprietary interest on the customer’s account. The reliability of an annual report is based on how relevant the report is regardless if an independent public accountant or a broker or dealer filed it.
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Question 3 of 10
3. Question
According to SEA Rule 17a-5, which of the following reports must be added to certain capital charges in the filing of monthly and quarterly annual reports?
I. A graph reflecting the daily intra-month VaR for each business line
II. The aggregate value at risk for the broker or dealer
III. Credit risk information on derivatives exposures
IV. The product category and the deduction for market risk for the scenario analysis method.Correct
All of the information stated above must be reported in addition to the capital charges in the filing of monthly and quarterly annual reports. These reports must be filed within 17 business days after the end of each month.
Incorrect
All of the information stated above must be reported in addition to the capital charges in the filing of monthly and quarterly annual reports. These reports must be filed within 17 business days after the end of each month.
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Question 4 of 10
4. Question
Which of the following is not included in the computation of a “membership interest” under the SEA Rule 17a-5?
Correct
Included in the computation of a membership interest are full membership, allied membership, associated membership, floor privileges, and other interest which exercises any privileges on an exchange or with an association. A membership interest may be a right to vote or right to receive information on the company’s affairs.
Incorrect
Included in the computation of a membership interest are full membership, allied membership, associated membership, floor privileges, and other interest which exercises any privileges on an exchange or with an association. A membership interest may be a right to vote or right to receive information on the company’s affairs.
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Question 5 of 10
5. Question
Which of the following additions are included in a general assessment payment form in determining “SIPC net operating revenues”?
I. Total revenues from the securities business of local subsidiaries
II. Net loss from principal transactions in securities in trading accounts
III. Revenues from commodity transactions
IV. Net gain from securities in investment accountsCorrect
Revenues from commodity transactions and net gain from securities are deductions recorded in a general assessment payment form. Total deductions must be deducted from the total additions in order to determine the amount of Net Operating Revenues.
Incorrect
Revenues from commodity transactions and net gain from securities are deductions recorded in a general assessment payment form. Total deductions must be deducted from the total additions in order to determine the amount of Net Operating Revenues.
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Question 6 of 10
6. Question
Which of the following deductions are included in a general assessment payment form in determining “SIPC net operating revenues”?
I. Direct expenses of printing, advertising, and legal fees incurred
II. Net loss from principal transactions in commodities in trading accounts
III. Reimbursements for postage in connection with the proxy solicitation
IV. Net loss from the management of or participation in the underwriting or distribution of securitiesCorrect
Net losses from principal transactions in commodities in trading accounts and net losses from the management of or participation in the underwriting or distribution of securities are not considered as a deduction, rather it is an addition in determining the SIPC net operating revenues. For easier determination of deductions and additions, some net losses are added and some net gains or revenues are deducted.
Incorrect
Net losses from principal transactions in commodities in trading accounts and net losses from the management of or participation in the underwriting or distribution of securities are not considered as a deduction, rather it is an addition in determining the SIPC net operating revenues. For easier determination of deductions and additions, some net losses are added and some net gains or revenues are deducted.
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Question 7 of 10
7. Question
In changing the exemptive status of a member, what action must be done by the member in order to not disqualify for the continued exemption even without obtaining a written approval?
Correct
A member shall not change its method of doing business to avoid any complications regarding its exemptive status. If a method of doing business has been changed, it will be reviewed once again to know if it is still qualified for the continued exception under SEA Rule 15c3-3.
Incorrect
A member shall not change its method of doing business to avoid any complications regarding its exemptive status. If a method of doing business has been changed, it will be reviewed once again to know if it is still qualified for the continued exception under SEA Rule 15c3-3.
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Question 8 of 10
8. Question
For the requests of removal or modification of a membership agreement restriction, what must be presented as compliance to FINRA Rule 1017?
Correct
Under FINRA Rule 1017, if an application is subject to removal or modification of a membership agreement restriction, the specific reason why there’s a need for removal or modification must be stated. All facts showing the circumstances which gave rise to the restriction must be presented.
Incorrect
Under FINRA Rule 1017, if an application is subject to removal or modification of a membership agreement restriction, the specific reason why there’s a need for removal or modification must be stated. All facts showing the circumstances which gave rise to the restriction must be presented.
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Question 9 of 10
9. Question
In relation to effecting change and imposition of interim restrictions, when must an application for removal or modification of membership agreement restriction be processed?
Correct
The removal or modification of membership agreement restriction shall be applied at any time as desired by the member. However, during the processing of the application, the existing restriction shall remain in effect.
Incorrect
The removal or modification of membership agreement restriction shall be applied at any time as desired by the member. However, during the processing of the application, the existing restriction shall remain in effect.
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Question 10 of 10
10. Question
What is the period required in rejecting an application that is not substantially complete with regards to application for approval of a change in ownership, control, or business operation?
Correct
Within 30 days after the filing of an application, if it is not substantially complete, the application shall be rejected by the department and deem it not to have been filed. In such cases, the reasons for the rejection must be served in a written notice. Rejection of application comes with an application fee refund.
Incorrect
Within 30 days after the filing of an application, if it is not substantially complete, the application shall be rejected by the department and deem it not to have been filed. In such cases, the reasons for the rejection must be served in a written notice. Rejection of application comes with an application fee refund.