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Question 1 of 10
1. Question
What is a written agreement between a member and a financial institution wherein a broker or dealer provides services within the premises of a financial institution?
Correct
A networking arrangement, as described in FINRA Rule 3160, is a written agreement where a broker or a dealer will provide services within the financial institution’s premises. This states the compensation arrangements for the broker-dealer and their obligations on the contract.
Incorrect
A networking arrangement, as described in FINRA Rule 3160, is a written agreement where a broker or a dealer will provide services within the financial institution’s premises. This states the compensation arrangements for the broker-dealer and their obligations on the contract.
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Question 2 of 10
2. Question
In the accounts at other broker-dealers and financial institutions, which of the following are the roles of an executing member?
I. To manage the performance of brokers or dealers in their current services
II. To manage the location of the financial institution for recordkeeping purposes
III. To transmit duplicate copies of confirmation statements
IV. To transmit copies of the transactional dataCorrect
Under FINRA Rule 3210, the role of an executing member is to duplicate copies of statements and confirmations or the transactional data of the accounts of other broker-dealers and financial institutions. On the other hand, an associated person’s role is to notify the executing member upon his or her association with the employer.
Incorrect
Under FINRA Rule 3210, the role of an executing member is to duplicate copies of statements and confirmations or the transactional data of the accounts of other broker-dealers and financial institutions. On the other hand, an associated person’s role is to notify the executing member upon his or her association with the employer.
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Question 3 of 10
3. Question
In transactions whether the associated person received or will receive selling compensation, what action must be done if the member approves the proposed transaction?
Correct
Under FINRA Rule 3280, if the transactions for compensation of associated person has been approved by the member, all selling compensations must be recorded on the books and records of the member. A member shall then supervise the participation of an associated person as if it was executed by the member.
Incorrect
Under FINRA Rule 3280, if the transactions for compensation of associated person has been approved by the member, all selling compensations must be recorded on the books and records of the member. A member shall then supervise the participation of an associated person as if it was executed by the member.
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Question 4 of 10
4. Question
In the case where the member disapproves of the transactions for compensation of an associated person, what action must be done by the associated person?
Correct
Incorrect
Under the FINRA Rule 3280, if the transactions for compensation were disapproved by the member, the associated person shall not, directly or indirectly, participate in any transactions. Only the approved participation of a person by the member are recognized on the books and records.
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Question 5 of 10
5. Question
Under FINRA Rule 9559, how shall the hearing officer act upon the cases where there are two consolidated matters with different timelines on the hearing for expedited proceedings?
Correct
In such cases where there are two consolidated matters with different timelines on the hearing for expedited proceedings, the Chief Hearing Officer shall only choose one timeline which is more appropriate under the facts and circumstances of the case. If one consolidated matter includes an action that is stayed up for ten business days, a restriction notice must be specified that it shall not have further stayed.
Incorrect
In such cases where there are two consolidated matters with different timelines on the hearing for expedited proceedings, the Chief Hearing Officer shall only choose one timeline which is more appropriate under the facts and circumstances of the case. If one consolidated matter includes an action that is stayed up for ten business days, a restriction notice must be specified that it shall not have further stayed.
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Question 6 of 10
6. Question
In relation to retention of jurisdiction, when must a complaint be filed if it is revoked or canceled upon such person’s failure?
Correct
Under Article V of FINRA By-Laws, a complaint about the termination of registration must be filed two years after the registration has been terminated or canceled. The two-year period is also applied in the case of an unregistered person which is ceased to be associated with the member.
Incorrect
Under Article V of FINRA By-Laws, a complaint about the termination of registration must be filed two years after the registration has been terminated or canceled. The two-year period is also applied in the case of an unregistered person which is ceased to be associated with the member.
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Question 7 of 10
7. Question
In which of the following areas are included in the discussion of the preceding year’s compliance efforts in relation to the supervisory control system?
I. Anti-fraud and sales practices
II. Anti-money laundering
III. Management
IV. Human resourcesCorrect
The areas of anti-fraud and sales practices and anti-money laundering must be reported on the discussion of the preceding year’s compliance efforts. This report must be submitted to senior management in a calendar year following a calendar wherein a member reported a greater than $200 million gross revenue.
Incorrect
The areas of anti-fraud and sales practices and anti-money laundering must be reported on the discussion of the preceding year’s compliance efforts. This report must be submitted to senior management in a calendar year following a calendar wherein a member reported a greater than $200 million gross revenue.
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Question 8 of 10
8. Question
Under the supervisory system, which must be done by the principal designated by the member in establishing, maintaining, and enforcing system policies and procedures?
I. Providing monthly reports to avoid misstatements
II. Verifying the member’s supervisory procedures if it is reasonably designed for the members and associated persons
III. Creating amendments on supervisory procedures by testing and verifying its function
IV. Sending reports to the senior management to ensure its reliability and consistencyCorrect
A principal designated by the member to establish, maintain, and enforce a supervisory control system must verify supervisory procedures and create amendments on it. A principal must also submit annual reports on detailing the supervisory control system and the summary of test results.
Incorrect
A principal designated by the member to establish, maintain, and enforce a supervisory control system must verify supervisory procedures and create amendments on it. A principal must also submit annual reports on detailing the supervisory control system and the summary of test results.
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Question 9 of 10
9. Question
What must an annual certification of compliance and supervisory processes contain?
I. The fact that a member can modify policies and procedures as legislative events dictate
II. Financial statements signed by the broker or dealer to prove their performance at work
III. The fact that a member can establish policies and procedures designed to achieve the FINRA rules, MSRB rules, and federal securities law and regulation
IV. The fact that a member can test the effectiveness of the policies and proceduresCorrect
A certificate of compliance and supervisory must contain the fact that the member can test the effectiveness, modify, and establish such policies and procedures. This certificate must be signed by the chief executive officer or any other equivalent officers for the compliance of FINRA rules, MRSB rules, and federal securities laws and regulations.
Incorrect
A certificate of compliance and supervisory must contain the fact that the member can test the effectiveness, modify, and establish such policies and procedures. This certificate must be signed by the chief executive officer or any other equivalent officers for the compliance of FINRA rules, MRSB rules, and federal securities laws and regulations.
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Question 10 of 10
10. Question
Where must a member obtain representation within twelve months before selling a new issue to any account?
I. From the beneficial owners
II. From the conduits
III. From the third parties
IV. From the subsidiariesCorrect
Under FINRA Rule 5130, the restrictions on the purchase and sale of initial equity public offerings are applied with sale preconditions. In selling a new issue to any account, a member must obtain a representation from the beneficial owners and conduits within twelve months prior to such sale. Beneficial owners are the account holders, and conduits are the bank, foreign bank, broker-dealer, or investment adviser.
Incorrect
Under FINRA Rule 5130, the restrictions on the purchase and sale of initial equity public offerings are applied with sale preconditions. In selling a new issue to any account, a member must obtain a representation from the beneficial owners and conduits within twelve months prior to such sale. Beneficial owners are the account holders, and conduits are the bank, foreign bank, broker-dealer, or investment adviser.