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ID#: 30789
If a registered representative is found to have engaged in insider trading, the member firm can be fined up to:
A) $25 million.
B) $500,000.
C) $1 million.
D) $5 million.
- D#: 30789
- The correct answer was A.
- A member firm, which must have procedures in place to prevent insider trading, can be penalized up to $25 million. Natural persons can be fined up to $5 million and 20 years in prison.
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ID#: 30262
Under Regulation A, when must a broker/dealer furnish an offering circular to purchasers?
A) 48 hours before the confirmation.
B) 24 hours before the confirmation.
C) 72 hours before the confirmation.
D) Concurrently with the mailing of the customer confirmation.
- ID#: 30262
- the correct answer was A.
- Regulation A requires that an offering circular be provided to purchasers at least 48 hours before the confirmation of sale.
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ID#: 205991
A well-known seasoned issuer, wishing to sell up to $300 million of convertible debt as market conditions permit, files a shelf registration statement with the SEC. Which of the following statements are true?
I. The registration statement is effective immediately.
II. The registration statement is effective upon completion of the cooling off period.
III. The registration statement must be updated every 2 years.
IV. The registration statement must be updated every 3 years.
A) I and IV.
B) I and III.
C) II and III.
D) II and IV.
- D#: 205991
- The correct answer was A.
- For WKSIs, shelf registration statements (SEC Rule 415) are effective immediately, good for 3 years and may use free writing communication.
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ID#: 30716
Rule 144 allows a member to contact which of the following potential buyers of Rule 144 stock?
I. Existing customers of the firm who already have positions in that security.
II. A customer who has indicated an interest in the issue within the preceding ten business days.
III. A broker/dealer who has indicated an interest in the issue within the preceding 60 calendar days.
IV. All existing customers of the firm.
A) II and III.
B) I and III.
C) I and IV.
D) II and IV.
- D#: 30716
- The correct answer was A.
- As a general rule, members selling Rule 144 stock cannot solicit buyers with two exceptions: they may solicit customers who have expressed an interest in the stock within the prior ten business days and other members who have expressed an interest within the prior 60 calendar days.
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ID#: 30744
If a market maker elects to function as a passive market maker during the restricted period, its daily net purchases are limited to what percentage of its ADTV?
A) 0.3.
B) 0.15.
C) 0.5.
D) 0.8.
- D#: 30744
- The correct answer was A.
- If there is a restricted period required by Regulation M, market makers that are also syndicate members in an additional issue offering can either seek an excused withdrawal for the period or elect to function as a passive market maker. As a passive market maker, a firm's net daily purchases are limited to 30% of the market maker's average daily trading volume in that stock.
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ID#: 30259
According to FINRA's Corporate Financing Department, stock acquired as compensation will not be considered unreasonable if the amount does not exceed what percentage of the total offering?
A) 10%.
B) 5%.
C) 15%.
D) There is no limitation.
- D#: 30259
- The correct answer was A.
- The Corporate Financing Department considers shares acquired by an underwriter in excess of 10% of the total offering to be unreasonable compensation.
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ID#: 31491
Which of the following are the minimum requirements to qualify an order as a block under NYSE Rule 127?
I. 1,000 shares or more.
II. 10,000 shares or more.
III. CMV above $5 per share.
IV. $200,000 or greater.
A) II and IV.
B) I and III.
C) I and IV.
D) II and III.
- D#: 31491
- The correct answer was A.
- Blocks, usually traded by large institutional investors, are defined as 10,000 or more shares or any volume of shares valued at $200,000 or more.
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ID#: 205957
A stock is delisted from Nasdaq for failure to meet maintenance listing standards. A Nasdaq market maker in that stock can immediately become a Bulletin Board market maker if it has made a continuous market in that stock during the
A) 30 calendar days prior to delisting.
B) 45 calendar days prior to delisting.
C) 60 calendar days prior to delisting.
D) 90 calendar days prior to delisting.
- D#: 205957
- The correct answer was A.
- As long as the firm has made a continuous market in the stock during the 30 calendar days prior to delisting, it can immediately become a Bulletin Board market maker without having to file Form 211.
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ID#: 30869
The minimum quote size for Bulletin Board issues with priced quotes:
A) varies based on each side quoted, which could create a different minimum size requirement for both the bid and the offer.
B) is 100 shares.
C) is 200 shares.
D) varies based on the bid price of the security quoted.
- D#: 30869
- The correct answer was A.
- The minimum size for Bulletin Board priced quotes ranges from 5,000 shares to 100 shares, depending on the bid and offer price. A different minimum size requirement could apply to the bid and the offer.
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ID#: 31449
FINRA must receive short interest reports on Nasdaq-listed securities from members no later than:
I. the second business day after each reporting settlement date.
II. the second business day after each reporting trade date.
III. 6:00 pm.
IV. 8:30 pm.
A) I and III.
B) I and IV.
C) II and III.
D) II and IV.
- D#: 31449
- The correct answer was A.
- Reports must be received by FINRA no later than 6:00 pm on the second business day after each reporting settlement date.
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ID#: 30860
Under a T3 modifier, the period between the time a market maker can begin quoting a stock and trading a stock is referred to as the
A) 5-minute window
B) 30-second window
C) 1-minute window
D) 3-minute window
- D#: 30860
- The correct answer was A.
- There is a 5-minute window that allows market makers to adjust their quotes before the reopening of trading.
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ID#: 30144
Which of the following are most likely to be covered by the penny stock rules?
I. Stock listed only on a regional exchange
II. Common stock trading under $5
III. Listed options on a stock under $5
IV. Stock quoted in the Pink Sheets or on the OTCBB
A) II and IV
B) I and III
C) I and IV
D) II and III
- D#: 30144
- The correct answer was A.
- Generally, penny stock trades at prices under $5 and is not a reported security (i.e., it is not listed on an exchange or on Nasdaq). A listed option does not fit the definition, regardless of price. Penny stocks would be quoted on the Pink Sheets or OTCBB.
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ID#: 31449
FINRA must receive short interest reports on Nasdaq-listed securities from members no later than:
I. the second business day after each reporting settlement date.
II. the second business day after each reporting trade date.
III. 6:00 pm.
IV. 8:30 pm.
A) I and III.
B) I and IV.
C) II and III.
D) II and IV.
- D#: 31449
- The correct answer was A.
- Reports must be received by FINRA no later than 6:00 pm on the second business day after each reporting settlement date.
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ID#: 30496
A T1 modifier displayed on a Nasdaq terminal indicates:
A) news is pending.
B) news has been released.
C) the time market makers can begin quoting the stock .
D) the time market makers can begin trading the stock .
- D#: 30496
- The correct answer was A.
- A T1 modifier displayed during a trading halt indicates that news is pending.
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ID#: 30851
A Bulletin Board market maker is quoting 17 - 17.05. Under FINRA rules, the market maker must be willing to buy or sell how many shares at its stated quote?
A) 200.
B) 100.
C) 500.
D) 1,000.
- D#: 30851
- The correct answer was A.
- Priced quotes must be firm for the following minimums: $1.01 - $10.00 (500 shares); $10.01 - $100.00 (200 shares).
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ID#: 30402
Which of the following is an established customer according to SEC Rule 15g-9?
A) Individual who carries an account with a firm and has effected a non-penny stock transaction more than 1 year previously
B) Individual who has opened an account within the past 6 months
C) Individual who opened a penny stock account with a firm and made 3 purchases of different penny stock issues on the same day
D) Individual who has established an account with a firm 8 months ago and has completed a total of 3 different penny stock transactions, each with a different firm
- D#: 30402
- The correct answer was A.
- An established customer is one who carries an account with a firm and has made a transaction or deposited funds or securities for at least 1 year or has engaged in at least 3 different penny stock transactions on 3 different days with the same firm.
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ID#: 30396
On Tuesday, March 15, FINRA notifies a broker/dealer that its registration to make a market in an existing Nasdaq security has been approved. The firm must enter a quotation in the security no later than:
A) opening on Tuesday, March 22.
B) opening on Wednesday, March 16.
C) close on Wednesday, March 16.
D) close on Tuesday, March 22.
- D#: 30396
- The correct answer was A.
- A market maker must enter quotations no later than the opening on the fifth business day after FINRA has approved its registration.
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ID#: 30420
All of the following statements regarding registration as an OTCBB market maker are true EXCEPT
A) a firm must wait 20 business days to re-register following a voluntary termination
B) Form 211 must be received by FINRA at least 3 business days before entering quotes
C) piggybacking allows market-making activity without the filing of a Form 211
D) quotes entered into the OTCBB can include one-sided quotes and unpriced indications of interest
- D#: 30420
- The correct answer was A.
- An OTCBB market maker can re-enter after a voluntary termination by filing a Form 211 or by using the piggybacking exemption, if available. There is no waiting period of 20 business days before re-registration for OTCBB market makers.
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ID#: 30417
According to SEC 15c2-11, a market maker's financial due diligence is considered satisfied by a copy of which of the following?
I. The issuer's latest 10-K filing and subsequent 10-Qs.
II. Regulation A offering circular effective within the previous 40 days.
III. A prospectus in effect for less than 90 days.
A) I, II and III.
B) I and II.
C) I and III.
D) II and III.
- D#: 30417
- The correct answer was A.
- A market maker satisfies the requirement of maintaining pertinent financial information on Bulletin Board issuers described in 15c2-11 with a copy of the issuer's latest 10-K filing and subsequent 10-Qs, a copy of a Regulation A offering circular that was effective within the previous 40 days, or a copy of a prospectus that has been in effect for less than 90 days.
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