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Question 1 of 10
1. Question
For purposes of FINRA Rule 11870, what are the reasons an asset is incapable of being transferred from the carrying member to the receiving member?
I. Because it is a general partnership interest in retail accounts
II. Because it is a product of a third party
III. Because it may be received due to regulatory limitations on the scope the business of the receiving member
IV. Because it is a proprietary product of the carrying memberCorrect
If an asset is incapable of being transferred from the carrying member to the receiving member, it is called a “non-transferrable asset.” It became non-transferable because it is a proprietary product of the carrying member, it may be received on the scope of receiving member’s business due to regulatory limitation, and it is a product of a third party. A limited partnership interest in retail accounts is also a characteristic of a non-transferable asset.
Incorrect
If an asset is incapable of being transferred from the carrying member to the receiving member, it is called a “non-transferrable asset.” It became non-transferable because it is a proprietary product of the carrying member, it may be received on the scope of receiving member’s business due to regulatory limitation, and it is a product of a third party. A limited partnership interest in retail accounts is also a characteristic of a non-transferable asset.
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Question 2 of 10
2. Question
How shall the receiving member and the carrying member resolve and reverse any nontransferable assets that were not properly identified during validation?
Correct
Under FINRA Rule 11870, it is the role of a receiving and carrying member to resolve and reverse nontransferable assets not properly identified during validation. In such cases, both members shall notify the customers regarding any updates to the records and its bookkeeping systems. Designating any assets that are a product of a third party shall be done upon the asset validation report.
Incorrect
Under FINRA Rule 11870, it is the role of a receiving and carrying member to resolve and reverse nontransferable assets not properly identified during validation. In such cases, both members shall notify the customers regarding any updates to the records and its bookkeeping systems. Designating any assets that are a product of a third party shall be done upon the asset validation report.
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Question 3 of 10
3. Question
Under FINRA Rule 11870, when must the carrying member provide the customer with a list of the specific assets and requests regarding the disposition of such assets?
Correct
In cases where nontransferable assets that are proprietary products of the carrying member are included in the securities account assets to be transferred in whole, the carrying member shall provide a list of the specific assets and request to the customer. This request shall be in writing at the time of validation of the transfer instruction.
Incorrect
In cases where nontransferable assets that are proprietary products of the carrying member are included in the securities account assets to be transferred in whole, the carrying member shall provide a list of the specific assets and request to the customer. This request shall be in writing at the time of validation of the transfer instruction.
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Question 4 of 10
4. Question
Which of the following are the alternative methods of disposition for nontransferable assets?
I. Physical and indirect transfer to the customer
II. Liquidation by the carrying member for the receiving member’s benefit
III. Retention by the carrying member for customer’s benefit
IV. LiquidationCorrect
Alternative methods of disposition for nontransferable assets include liquidation, retention by the carrying member for the customer’s benefit, and physical and direct transfer to the customer in their name. The liquidation shall specifically indicate any liquidation-related fees to be deducted from the money balance due to the customer. The remaining balance will then be distributed to the customer.
Incorrect
Alternative methods of disposition for nontransferable assets include liquidation, retention by the carrying member for the customer’s benefit, and physical and direct transfer to the customer in their name. The liquidation shall specifically indicate any liquidation-related fees to be deducted from the money balance due to the customer. The remaining balance will then be distributed to the customer.
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Question 5 of 10
5. Question
Which of the following must be authorized to the custodian or trustee for the account with respect to transfers of retirement plan securities account assets?
Correct
Any custodian or trustee is authorized to deduct any outstanding fees due to the custodian or trustee from the credit balances in the account with respect to transfers of retirement plan securities account assets. If the credit balance is insufficient, assets shall be liquidated to the extent necessary to satisfy the outstanding fees due to the custodian/trustee.
Incorrect
Any custodian or trustee is authorized to deduct any outstanding fees due to the custodian or trustee from the credit balances in the account with respect to transfers of retirement plan securities account assets. If the credit balance is insufficient, assets shall be liquidated to the extent necessary to satisfy the outstanding fees due to the custodian/trustee.
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Question 6 of 10
6. Question
When shall an account to be transferred be “frozen” by a carrying member?
Correct
It is stated in the FINRA Rule 11870 that upon validation of an instruction to transfer securities account assets, the account to be transferred shall “freeze” by the carrying member. It may be done to all open orders excluding option positions to expire within seven business days. In such cases, it must be canceled and not take any new orders.
Incorrect
It is stated in the FINRA Rule 11870 that upon validation of an instruction to transfer securities account assets, the account to be transferred shall “freeze” by the carrying member. It may be done to all open orders excluding option positions to expire within seven business days. In such cases, it must be canceled and not take any new orders.
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Question 7 of 10
7. Question
What are the exceptions to a transfer instruction by a carrying member?
I. If it does not violate the member’s credit policy
II. If the account is flat and reflects no transferable assets
III. If legal documents are required such as death or marriage certificate
IV. If it is not a duplicate requestCorrect
If the account is flat and reflects no transferable assets, and if additional documentation is required, a carrying member may take exception to a transfer instruction. Additional exceptions are if it is a duplicate request and if it violates the member’s credit policy. These exceptions are stated in the FINRA Rule 11870 under the customer account transfer contracts.
Incorrect
If the account is flat and reflects no transferable assets, and if additional documentation is required, a carrying member may take exception to a transfer instruction. Additional exceptions are if it is a duplicate request and if it violates the member’s credit policy. These exceptions are stated in the FINRA Rule 11870 under the customer account transfer contracts.
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Question 8 of 10
8. Question
What is a safekeeping position?
Correct
As defined in FINRA Rule 11870, a safekeeping position is securities held by a carrying member in the name of the customer. Included in the safekeeping positions are the unendorsed securities or have a stock or bond power attached in security.
Incorrect
As defined in FINRA Rule 11870, a safekeeping position is securities held by a carrying member in the name of the customer. Included in the safekeeping positions are the unendorsed securities or have a stock or bond power attached in security.
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Question 9 of 10
9. Question
Which associated persons are exempted from registration?
I. If their functions are not exclusively clerical and ministerial
II. If their functions are not exclusive to transactions in municipal securities
III. If their functions are exclusive to transactions in security features
IV. If their functions are exclusive to transactions in commodityCorrect
If the functions of an associated person are exclusively for transactions in security features, in commodity, and in municipal securities, they are exempted from registration. This is a requirement provided in FINRA Rule 1230. He or she is also exempted if their functions are exclusively clerical and ministerial.
Incorrect
If the functions of an associated person are exclusively for transactions in security features, in commodity, and in municipal securities, they are exempted from registration. This is a requirement provided in FINRA Rule 1230. He or she is also exempted if their functions are exclusively clerical and ministerial.
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Question 10 of 10
10. Question
Which of the following is correct regarding the function of accepting customer orders?
Correct
Accepting customer orders is not a clerical and ministerial function, therefore, it is not exempted from registration under FINRA Rule 1230. It shall be registered in an appropriate registratoin category. If the associated person occassionally transcribes order details and confirmed the order details before entering the order, it is not considered to be accepting customer order.
Incorrect
Accepting customer orders is not a clerical and ministerial function, therefore, it is not exempted from registration under FINRA Rule 1230. It shall be registered in an appropriate registratoin category. If the associated person occassionally transcribes order details and confirmed the order details before entering the order, it is not considered to be accepting customer order.