-
ID#: 30269
Under the provisions of Rule 144, what is the minimum holding period for the sale of control stock acquired through an open-market purchase?
A No holding period required
B 6 months
C 1 year
D 2 years
- D#: 30269
- The correct answer was A
- Rule 144 governs sales by 2 different categories of people-affiliates control persons and nonaffiliates The rule also applies to 2 categories of stock-registered and unregistered Therefore, to answer concerning restrictions on stock sales under Rule 144, 2 issues are involved In this, the seller is an affiliate and the stock is registered Therefore, the sale is subject to the volume restrictions imposed by Rule 144, but no holding period is required
-
ID#: 31286
Which of the following statements are TRUE regarding a Green Shoe clause?
I It must be disclosed in the registration statement only
II It must be disclosed in both the registration statement and the prospectus
III It allows the syndicate to sell up to 10% more shares than initially registered
IV It allows the syndicate to sell up to 15% more shares than initially registered
A I and III
B II and IV
C I and IV
D II and III
- D#: 31286
- The correct answer was B
- A Green Shoe clause in the underwriting agreement, which must be agreed to by the issuer, allows the underwriters to sell up to 15% more shares than registered with the SEC To be effective, a Green Shoe clause must be disclosed in both the registration statement and the prospectus
-
ID#: 30261
Notification of a sale under Regulation A in the form of an offering circular must be filed with the SEC how many calendar days before the initial offering?
A 10
B 5
C 20
D 30
- D#: 30261
- The correct answer was C
- Regulation A requires notification to the SEC 20 calendar days before the sale
-
ID#: 31381
Under FINRA Rule 5150, which of the following statements regarding fairness opinions are TRUE?
I A member issuing a fairness opinion may receive compensation contingent upon the successful completion of the transaction
II A member issuing a fairness opinion may not receive compensation contingent upon the successful completion of the transaction
III A member issuing a fairness opinion must disclose any material relationships that existed during the past 2 years with any party to the transaction
IV A member issuing a fairness opinion must disclose any material relationships that existed during the past 3 years with any party to the transaction
A II and IV
B I and IV
C II and III
D I and III
- D#: 31381
- The correct answer was D
- Compensation may be contingent on the successful completion of the transaction as long as this is disclosed in the fairness opinion Further, all material relationships that existed during the prior 2 years with any party involved in the transaction must also be disclosed in the opinion
-
ID#: 30273
In order to qualify for exemption under Rule 147, what percentage of an issuer's gross assets must be physically located or held within its home state?
A 80%
B 70%
C 90%
D 100%
- D#: 30273
- The correct answer was A
- At least 80% of an issuer's gross assets must be physically located within its home state
-
ID#: 206007
Under SEC rules, a seasoned issuer must have a public float value of at least:
A $50 million
B $75 million
C $100 million
D $250 million
- D#: 206007
- The correct answer was B
- The minimum threshold is $75 million
-
ID#: 31117
To be considered an actively traded security under Regulation M, an issue must have which of the following?
I An average daily trading volume of $1 million or more
II An average daily trading volume of $5 million or more
III A public float value of $100 million or more
IV A public float value of $150 million or more
A I and IV
B II and III
C I and III
D II and IV
- D#: 31117
- The correct answer was C
- To be considered an actively traded security, an issue must have an average daily trading volume of $1 million or more and a public float of $150 million or more If a security is actively traded, there are no restrictions placed on market makers trading the issue before an offering of its securities
-
ID#: 30909
Tender offers must be open for how many business days from the first publication of the offer?
A 15
B 5
C 10
D 20
- D#: 30909
- The correct answer was D
- If the terms are changed, the offer must be open for at least 10 business days from the date of change but never for less the original 20 business days
-
ID#: 30410
All of the following statements about tender offers are true EXCEPT
A if the entity that makes an offer increases the price of the stock subject to the tender, the new offer must remain open for a minimum of 20 business days from the date of the change
B an entity that makes a cash tender offer for a given stock is prohibited from purchasing bonds convertible into that stock while the tender offer is open
C tender offers must remain open for a minimum of 20 business days
D only the net long position of an investor can be tendered
- D#: 30410
- The correct answer was A
- When any change in the terms of a tender occurs, the new offer must remain open for a minimum of 10 business days from the change The entity making the tender may not purchase securities convertible into the stock in the open market once the offer is announced
-
ID#: 30591
Under Regulation D, Rule 504 offerings deal with a sale of securities:
A without regard to dollar amount
B not exceeding $1 million
C not exceeding $100,000
D not exceeding $5 million
- D#: 30591
- The correct answer was B
- Regulation D offerings are exempt transactions under the Act of 1933 Rule 504 deals with private placements in which the dollar amount to be sold is $1 million or less Rule 505 offerings are those in which the offering amount is between $1 million and $5 million Rule 506 deals with private placements in which there is no ceiling on the dollar amount sold
-
ID#: 30683
Under state law, an offer of rescission made by a broker/dealer to a customer must be accepted or rejected by the customer within how many days of the offer?
A 45
B 15
C 30
D 60
- D#: 30683
- The correct answer was C
- An offer of rescission must be accepted within 30 days of the offer Rescission can occur if a member solicits an unsuitable trade for a customer and subsequently wishes to rescind the trade With an offer of rescission, the member offers to buy back the security from the customer at cost plus interest at 6% The offer becomes void after 30 days, and the customer can no longer sue for recovery of any losses
-
ID#: 30339
How many business days after the settlement date does a broker/dealer have to buy in a customer who has failed to deliver securities to satisfy a sale?
A 40
B 15
C 30
D 10
- D#: 30339
- The correct answer was D
- SEC rules require that customer fails to deliver be bought in no later than ten business days after settlement
-
ID#: 30688
A Series 11 registration permits an individual to
I provide quotes
II enter orders
III accept new customers
IV solicit new customers
A I and II
B I and III
C II and IV
D III and IV
- D#: 30688
- The correct answer was A
- A Series 11 registration sales assistant allows the holder to provide quotes and enter unsolicited orders The holder cannot solicit business or recommend securities; only a principal can accept new customers
-
ID#: 30775
The Federal Reserve will determine the marginability of a new issue once the security has traded in the secondary market for:
A 45 days
B 30 days
C 60 days
D 90 days
- D#: 30775
- The correct answer was B
- A new issue becomes marginable if determined by the Fed only after it has traded in the secondary market for 30 days
-
ID#: 205765
Under the USA Patriot Act, firms must make records relating to wire transfers of:
A $5,000 or more
B $2,000 or more
C $3,000 or more
D $10,000 or more
- D#: 205765
- The correct answer was C
- The Patriot Act requires firms to make and retain records relating to wire transfers of $3,000 or more Information to be collected includes the name and address of both sender and recipient, the amount of the transfer, the name of the recipient's financial institution and the account number of the recipient
-
ID#: 30796
Mutual fund shares:
A are never marginable
B may be purchased on margin
C are marginable only after being held for 90 days
D are marginable only after being held for 30 days
- D#: 30796
- The correct answer was D
- Mutual fund shares may not be purchased on margin but are marginable after being held, fully paid, for 30 calendar days
-
ID#: 30878
The ACT Risk Management Alert notifies a clearing firm that one of its executing brokers has entered a trade that exceeds its single trade limit Which of the following statements regarding this blockbuster trade is TRUE?
A The clearing member has 15 minutes to review the trade and can choose to accept or reject it
B The clearing member is obligated to accept the trade but can refuse further trades submitted by the executing broker
C The clearing member is obligated to accept this trade and any others over the limit The alert merely notifies the clearing member that additional capital may be needed
D The clearing member is required to refuse any trades over the established limit
- D#: 30878
- The correct answer was A
- A clearing member has 15 minutes to accept or reject a trade that exceeds the single trade limit $1 million A trade in excess of this limit is known as a blockbuster trade
-
ID#: 31342
Once in receipt of a TRACE report on a corporate bond trade, FINRA will disseminate a trade report to the public:
A within 90 seconds
B immediately
C within 15 minutes
D within 24 hours
- D#: 31342
- The correct answer was B
- FINRA disseminates TRACE-generated reports to the public immediately after receipt
-
ID#: 30720
If there are no priced quotations on the OTCBB or OTC Pink for a security and a member receives an order to buy the securities, to determine the prevailing market, the member must contact a minimum of
A 2 dealers
B 1 dealer
C 3 dealers
D 4 dealers
- D#: 30720
- The correct answer was C
- A member must contact a minimum of 3 dealers or all dealers if 3 or less to determine the prevailing market If 2 or more priced quotations are available, this requirement is waived
-
ID#: 30993
If a market maker's bid or offer is decremented to zero, and the firm is not using Automatic Quote Refresh, the firm must update its quote and size within how many seconds?
A 60
B 5
C 15
D 30
- D#: 30993
- The correct answer was D
- Once decremented to zero, the firm has 30 seconds to update If, after 30 seconds, the firm does not update or voluntarily withdraw as a market maker, Nasdaq will automatically refresh its quote for 100 shares to $01 away from the worst displayed price in the montage
-
ID#: 30406
After a firm voluntarily terminates registration as a Nasdaq or an ADF market maker in a particular security, re-registration is not allowed for a period of how many business days?
A 20 days
B 5 days
C 10 days
D 1 day
- D#: 30406
- The correct answer was A
- Nasdaq and ADF market makers are subject to a penalty period of 20 business days following voluntary termination pursuant to FINRA Rule 6276
-
ID#: 30590
Under the Investment Company Act of 1940, mutual funds must send financial statements to shareholders at least:
A monthly
B semiannually
C quarterly
D annually
- D#: 30590
- The correct answer was B
- Under the Investment Company Act of 1940, mutual funds must provide semiannual and annual reports to shareholders
-
ID#: 30781
Unless an extension of time is granted by FINRA, customer fails-to-deliver must be bought in after
A 5 business days from settlement date
B 3 business days from settlement date
C 10 business days from settlement date
D 7 business days from settlement date
- D#: 30781
- The correct answer was C
- Under SEC rules, customer fails-to-deliver must be bought in after 10 business days from settlement date
-
ID#: 30519
Standby purchasers are NOT subject to FINRA Rule 5130 provided which of the following is done?
I The standby arrangement is disclosed in the final prospectus
II The standby arrangement is in writing
III The syndicate manager represents, in writing, that it was unable to find any other purchasers for the securities
IV The securities are locked up for three months
A II and IV
B I and III
C II and III
D I, II, III and IV
- D#: 30519
- The correct answer was D
- If the issue is not moving well, the syndicate manager may allow standby purchasers individuals or firms who would otherwise be restricted under FINRA Rule 5130 to buy at the offering price Securities purchased in a standby arrangement are not subject to FINRA Rule 5130 provided the arrangement is disclosed in the final prospectus and the syndicate manager represents in writing that it was unable to find any other purchasers for the new issue Securities purchased pursuant to a standby arrangement are subject to a three-month lockup
-
ID#: 31129
An established NYSE member firm has net capital of $300,000 It will be in early warning when its aggregate indebtedness exceeds
A $36 million
B $24 million
C $3 million
D $45 million
- D#: 31129
- The correct answer was A
- An established firm is in early warning when its capital falls below 120% of minimum or its AI-to-NC ratio exceeds 12 to 1 12 � $300,000 = $36 million
-
ID#: 30447
If an individual fails a FINRA qualification exam 3 consecutive times, a 4th attempt may not be made for
A 30 days
B 6 months
C 60 days
D 90 days
- D#: 30447
- The correct answer was B
- If a qualification exam is failed 3 consecutive times, a 4th attempt may not be made for 6 months
-
ID#: 30540
All of the following records must be retained for 6 years EXCEPT
A the general ledger
B blotters
C FOCUS reports
D the stock record
- D#: 30540
- The correct answer was C
- The 6-year records include blotters, the general ledger, the stock record, customer ledgers, and customer account information FOCUS reports are kept for 3 years
-
ID#: 30576
Copies of subordinated loan agreements must be filed with FINRA how many days prior to the effective date?
A 20
B 10
C 15
D 30
- D#: 30576
- The correct answer was D
- All subordinated loan agreements, including secured demand notes, must be filed with FINRA at least 30 days prior to the effective date of such loans Written approval from FINRA is required before a member can include these loans as part of its capital
-
ID#: 205953
A customer buys $25,000 of stock and deposits the required margin The member firm, to finance the purchase, will
A rehypothecate $17,500 of stock and borrow $12,500
B rehypothecate $17,500 of stock and borrow $17,500
C rehypothecate $25,000 of stock and borrow $17,500
D rehypothecate $25,000 of stock and borrow $12500
- D#: 205953
- The correct answer was A
- The firm is limited to 140% of the customer's debit balance when taking stock to a bank for a loan In this case, the customer's debit balance is $12,500 140% � $12,500 is $17,500
-
ID#: 31229
Under NYSE Rule 127, a block of stock is defined as a quantity of stock having a market value of at least
A $100,000
B $200,000
C $150,000
D $175,000
- D#: 31229
- The correct answer was B
- Throughout the industry, a block trade is one of at least 10,000 shares or a quantity of stock having a value of at least $200,000
-
ID#: 31100
Under SEC rules, the minimum equity required for prime brokerage accounts is:
A $250,000
B $100,000
C $500,000
D $1 million
- D#: 31100
- The correct answer was C
- The SEC requires a minimum equity of $500,000 for prime brokerage accounts The minimum net capital requirement is $1,500,000
-
ID#: 30464
Under FINRA rules, the carrying member-after receiving account transfer instructions from the receiving member-must validate the positions in the account within how many business days of receipt?
A 7 days
B 4 days
C 5 days
D 1 day
- D#: 30464
- The correct answer was D
- Within 1 business day following receipt of the A-CAT Form, the carrying firm must validate the positions in the account and return the transfer instruction to the receiving member with an attachment showing all securities positions
-
ID#: 30468
A member firm maintains a list of borrowable securities for short sale purposes Under FINRA rules, this list must be updated:
A daily
B twice daily
C every 48 hours
D weekly
- D#: 30468
- The correct answer was A
- A list of borrowable securities for short sale purposes can be no more than 24 hours old
-
ID#: 31425
A clearing firm is required to file, with FINRA, information on the time extension requests it made on behalf of its introducing firms These reports must be made:
A daily
B monthly
C weekly
D quarterly
- D#: 31425
- The correct answer was B
- To monitor extension requests, FINRA requires clearing firms to file monthly reports within five business days of month end, indicating which of its introducing firms requested extensions that exceeded 2% of their total transactions for the month If an introducing firm has a ratio that exceeded 3%, it will be prohibited from any further extension requests for a 90-day period if it does not reduce its ratio by the next monthly reporting period
-
ID#: 31378
Once in receipt of an account transfer form, your firm must
I validate the transfer instruction within 1 business day of receipt
II validate the transfer instruction within 3 business days of receipt
III effect the transfer within 1 business day of validation
IV effect the transfer within 3 business days of validation
A II and III
B I and III
C I and IV
D II and IV
- D#: 31378
- The correct answer was C
- Account transfer requests must be validated within 1 business day of receipt Once validated, your firm has 3 business days to effect the transfer
-
ID#: 31001
Under Regulation SP, if a member firm sends to a customer an initial privacy notice that contains an opt-out provision, the firm may not disclose nonpublic, personal information about that customer for how many days from mailing?
A 20
B 10
C 15
D 30
- D#: 31001
- The correct answer was D
- A firm must give a customer 30 days to implement any opt-out provision in the privacy notice
-
ID#: 31191
Under FINRA rules, fee-based accounts must be reviewed by member firms:
A periodically
B frequently
C quarterly
D annually
- D#: 31191
- The correct answer was A
- Members are required to review fee-based accounts periodically to determine whether they remain appropriate
-
ID#: 30691
Excess margin securities are defined as securities in excess of:
A the customer's debit balance
B 140% of the customer's debit balance
C 70% of the customer's debit balance
D minimum maintenance margin requirements
- D#: 30691
- The correct answer was B
- Excess margin securities are securities in excess of 140% of the customer's debit balance Margin securities 140% of the debit balance are at a bank collateralizing the customer's debit For example, if a customer purchases $20,000 of stock, the customer will put up $10,000 and borrow $10,000 The member will take $14,000 of the stock to a bank to collateralize the $10,000 debit The balance $6,000 of the stock must be placed in segregation excess margin securities
-
ID#: 30520
When is a Form 13-D filing made?
I When an unaffiliated entity acquires a 5% or more interest in an issuer
II When an insider acquires a 5% or more interest in the employing issuer's securities
III When an investment company acquires a 5% or more interest in an issuer
A II and III
B I and II
C I only
D I, II and III
- D#: 30520
- The correct answer was C
- SEC Form 13-D is filed when an unaffiliated entity acquires a 5% or more interest in an issuer Investment companies would file Form 13-G Insiders would file SEC Form 4
-
ID#: 31199
Under SEC rules, Form 8-K must be filed
A within 15 business days of the event
B promptly
C within 10 business days of the event
D within 4 business days of the event
- D#: 31199
- The correct answer was D
- Form 8-K is used to report newsworthy events to the SEC The reporting time limit is 4 business days
-
ID#: 30424
According to Rule 103 of Regulation M, passive market-making activity
A is only allowed for firm commitment offerings
B is allowed for firm commitment and best efforts offerings
C can only begin if notification was given to Nasdaq at least 3 business days prior to the beginning of the restricted period
D is only allowed for at-the-market offerings
- D#: 30424
- The correct answer was A
- Passive market-making activity is permitted for fixed price, firm commitment offerings only There can be no passive market-making activity in at-the-market offerings or best efforts underwritings Notice of passive market-making activity must be given 1 business day prior to the beginning of the restricted period
-
ID#: 30513
Under SEC Rule 10b-13, a company that is the target of a tender offer must provide its shareholders with a statement indicating acceptance or rejection of the offer within how many business days of the announcement?
A 5
B 10
C 15
D 20
- D#: 30513
- The correct answer was B
- Once a tender offer is announced, the target company, within ten business days of the announcement, must provide its shareholders with a statement indicating acceptance or rejection of the offer and the reasons for the position taken
-
ID#: 30370
The maximum public offering permissible under Regulation A is:
A $15 million per issuer and $100,000 per affiliate
B $500,000 per issuer and $500,000 per affiliate
C $5 million per issuer and $15 million per affiliate
D $15 million per issuer and $500,000 per affiliate
- D#: 30370
- The correct answer was C
- The maximum size of an offering under Regulation A is $5 million per issuer and $15 million per affiliate Sales are measured over a 12-month period
-
ID#: 30275
An issuer of securities under Rule 147 must do all of the following EXCEPT:
A issue stop transfer instructions to the transfer agent barring certificate cancellation and reissuance in the name of any nonresident of the state, with such in effect for nine months B obtain a written representation from each purchaser as to that person's residence
C place a legend on the securities stating that they have not been registered under the Securities Act of 1933 and that resale is limited
D obtain the purchaser's signature on an investment letter in which the buyer agrees to hold the securities for a minimum of nine months, after which they may only be sold in accordance with volume limitations imposed under Rule 144
- D#: 30275
- The correct answer was D
- Under the Rule 147 safe harbor, a written statement as to state of residence must be obtained and the securities will be restricted for a nine-month period The transfer agent must be notified, and the fact that the securities are unregistered must be noted on the certificates Rule 147 securities must be held for nine months before being sold out of state, but they can be sold immediately to another resident Rule 144 does not apply
-
ID#: 31476
Reports of sales made pursuant to Regulation A must be filed with the SEC
A every 6 months following the date of the original offering
B every 3 months following the date of the original offering
C every 9 months following the date of the original offering
D annually
- D#: 31476
- The correct answer was A
- During the offering period of a Regulation A offering, sales reports must be filed with the Securities and Exchange Commission every 6 months A sales report must also be filed with the SEC when the offering period ends
-
ID#: 206124
Under the Hart-Scott-Rodino Act, a report must be filed with the FTC if the value of the proposed acquisition or merger exceeds
A $926 million
B $682 million
C $1262 million
D $1852 million
- D#: 206124
- The correct answer was B
- If the value of the proposed transaction exceeds $682 million, a report must be filed with the FTC and the Dept of Justice
-
ID#: 30381
Under Rule 144, which of the following sales are subject to volume restrictions?
I Control person selling registered stock held for 1 year
II Control person selling restricted stock held for 2 years
III Nonaffiliate selling registered stock held for 1 year
IV Nonaffiliate selling restricted stock held for 2 years
A II and IV
B I and III
C I and II
D III and IV
- D#: 30381
- The correct answer was C
- Control persons are always subject to volume restrictions
-
ID#: 205943
Any freely transferable stock received by the underwriters as part of the compensation package must be restricted for resale for
A one year from the effective date
B 90 days from the effective date
C 270 days from the effective date
D 180 days from the effective date
- D#: 205943
- The correct answer was D
- The lockup period is 180 days from the effective date
-
ID#: 30861
Under Rule 103, application for acting as a passive market maker must be made
A 1 business day before the restricted period
B on or before the restricted period
C 2 business days before the restricted period
D 3 business days before the restricted period
- D#: 30861
- The correct answer was A
- Market makers who are also syndicate members in additional issue offerings must advise Nasdaq 1 business day prior to the beginning of the restricted period as to whether they elect to seek an excused withdrawal or to function as passive market makers
-
ID#: 206125
Form 3, attesting to the ownership of the common stock of an issuer, must be filed with the SEC within how many days of becoming an officer or director of that issuer?
A 2
B 10
C 3
D 5
- D#: 206125
- The correct answer was B
- Sarbanes-Oxley requires that within 10 days of becoming an officer or director of a publicly traded issuer, such person must file with the SEC a statement as to his ownership of the common stock of the issuer The initial statement of ownership is done on Form 3 Subsequent changes are made on Form 4 within 2 business days
-
ID#: 30253
If a public offering of ABC common stock is to be immediately listed and traded on 1 or more securities exchanges, the maximum number of stabilizing bids that may be maintained by the underwriters per exchange is
A 3
B 2
C 1
D 4
- D#: 30253
- The correct answer was C
- Only 1 stabilizing bid is allowed per market
-
ID#: 31104
All representations relating to whether an account is eligible to purchase new equity issues at the public offering price must be retained for how many years?
A 6 years
B 1 year
C 5 years
D 3 years
- D#: 31104
- The correct answer was D
- Representations obtained to determine the eligibility of an account to purchase a new equity issue must be retained for 3 years
-
ID#: 30590
Under the Investment Company Act of 1940, mutual funds must send financial statements to shareholders at least:
A semiannually
B monthly
C quarterly
D annually
- D#: 30590
- The correct answer was A
- Under the Investment Company Act of 1940, mutual funds must provide semiannual and annual reports to shareholders
-
ID#: 31112
In its notice to the SEC and FINRA regarding termination of its independent accountant, a member must address all accounting and auditing disputes with its former accountant over the prior:
A 12 months
B 24 months
C 18 months
D 36 months
- D#: 31112
- The correct answer was B
- All disputes over the 24-month period before termination must be addressed-whether or not they were resolved to the former accountant's satisfaction
-
ID#: 205961
Under SEC rules, temporary subordinated loans may not have a maturity exceeding
A 90 days
B 30 days
C 45 days
D 60 days
- D#: 205961
- The correct answer was C
- Firms are limited to 3 temporary subordinated loans in any 12 month period Also, the maximum duration of each loan is 45 days
-
ID#: 30583
If the market value of securities underlying a secured demand note should decline sharply, FINRA must be notified:
A prior to month end
B by the close of business on the day of the decline
C by noon of the following business day
D immediately
- D#: 30583
- The correct answer was D
- SEC rules require that if the market value of securities underlying a secured demand note were to drop sharply market value below loan amount, FINRA must be notified immediately
-
ID#: 30957
Under SEC rules, the minimum net capital requirement for a firm operating under a k2i exemption is
A $100,000
B $25,000
C $50,000
D $250,000
- D#: 30957
- The correct answer was A
- A firm that clears its business on an omnibus basis is exempt k2i from the requirements of the customer protection rule The minimum net capital requirement is $100,000 for these firms
-
ID#: 30797
Copies of temporary subordinated loan agreements must be filed with FINRA
A on or before the effective
B date ten days before the effective date
C 20 days before the effective date
D 30 days before the effective date
- D#: 30797
- The correct answer was B
- Copies of temporary subordinated loan agreements must be filed with FINRA at least 10 days before the effective date of the loan Regular subordinated loan agreements must be filed at least 30 days before the effective date
-
ID#: 30673
Under SEC Rule 15c3-1, the minimum net capital requirement for an established carrying firm is:
I $100,000
II $250,000
III 1/8 of AI
IV 1/15 of AI
A I or IV, whichever is greater
B I or III, whichever is less
C II or IV, whichever is greater
D II or III, whichever is less
- D#: 30673
- The correct answer was C
- The minimum net capital requirement for an established carrying firm is $250,000 or 1/15 of AI, whichever is greater
-
ID#: 30323
A broker/dealer's outside public accountant decides to terminate his association with the broker/dealer The broker/dealer has what obligation in this matter?
A None: a broker/dealer may choose to initiate or cancel a contract with any accountant
B It must notify FINRA by filing a FOCUS IIA with the FINRA district office
C None: only if the broker/dealer had terminated the contract would it have had to notify the SEC and FINRA immediately
D It must notify the SEC and FINRA within 15 business days
- D#: 30323
- The correct answer was D
- Rule 17a-5 requires that if the accountant or the broker/dealer terminates the association, the SEC and FINRA must be notified within 15 business days
-
ID#: 206123
Under SEC 17a-11, a report must be filed with FINRA within 48 hours of which of the following notifications?
I Debt equity ratio exceeds 70% for a period of more than 90 days
II AI to NC ratio exceeds 12:1
III Material inadequacies in the accounting system
IV Books and records not current
A III and IV
B I and II
C I and IV
D II and III
- D#: 206123
- The correct answer was A
- If a firm is reporting material inadequacies in its accounting system notification within 24 hours or that its books and records are not current immediate notification, it must also file a report, within 48 hours, detailing the steps being taken to correct the situation
-
ID#: 30240
A subordinated loan agreement can NOT be prepaid for a period of
A 6 months
B 1 year
C 3 years
D no minimum time
- D#: 30240
- The correct answer was B
- Subordination agreements other than temporary subordinations must have a minimum term of 1 year
-
ID#: 30767
Which of the following will cause an established carrying firm with a minimum net capital requirement of $250,000 to be in early warning?
I Its capital falls below $300,000
II Its capital falls below $250,000
III Its AI-to-NC ratio exceeds 12:1
IV Its AI-to-NC ratio exceeds 15:1
A II and III
B I and IV
C I and III
D II and IV
- D#: 30767
- The correct answer was C
- An established firm is in early warning if its computed capital falls below 120% of the minimum or its AI-to-NC ratio exceeds 12:1 An AI-to-NC ratio exceeding 15:1 and capital below $250,000 would be violations of the net capital rule
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