P2U10

  1. Question #1 of 26Question ID: 1269510
    Which of the following organizations looks to promote self-discipline among members and investigate and resolve grievances between the public and members and between members?




    • D)
    • Explanation

    FINRA regulates all matters related to investment banking, trading in the over-the-counter (OTC) markets and some exchange markets, and the conduct of FINRA member firms and associated persons including the promotion of self-discipline among members. It also investigates and looks to resolve grievances between the public and members and between members. The MSRB relies upon FINRA to perform dispute resolution.
  2. Question #2 of 26Question ID: 1269507
    All of the following self-regulatory organizations (SROs) function under the Securities and Exchange Commission's (SEC's) oversight except




    • B)
    • Explanation

    SROs function under the SEC's oversight. Each SRO is accountable to the Commission for enforcing federal securities laws, as well as supervising securities practices within an assigned jurisdiction. These include FINRA, MSRB, and CBOE.
  3. Question #3 of 26Question ID: 1269514
    An associated person of a Financial Industry Regulatory Authority (FINRA) member firm has been found guilty of forging a customer's signature on a document relating to a securities transaction. Under the Code of Procedure, FINRA could impose any of the following sanctions except




    • A)
    • Explanation

    FINRA does not have arrest or imprisonment authority, but in the event of a violation, FINRA may impose any fitting sanction on the guilty firm or associated person. Customary penalties include censure, suspension, expulsion, and fines, but FINRA is not limited to those. For example, taking the licensing exam is often imposed on associated persons found guilty of a violation.
  4. Question #4 of 26Question ID: 1269523
    Which of the following regulatory authorities relies exclusively upon other examining authorities to enforce its rules?




    • C)
    • Explanation

    The MSRB differs from other regulatory bodies in that it writes its own rules, but by law, it cannot enforce them. Rather, the board must rely entirely upon other designated examining authorities to enforce its rules.
  5. Question #5 of 26Question ID: 1269512
    Under Financial Industry Regulatory Authority (FINRA)'s Code of Procedure, which of the following is not a sanction that could be imposed against a firm or registered person?




    • C)
    • Explanation

    A jail sentence is not within the jurisdictional powers of FINRA. However, censure (generally meant to mean public disclosure), fines, suspension of the membership of a member or suspension of the registration of an associated person for a definite period, expulsion of the member (canceling the membership of the member), and the barring of an associated person from association with all members (essentially barring one from the industry) are all sanctions under FINRA's Code of Procedure. Additionally, imposition of any other fitting sanction is specified. However, this would not include criminal penalties such as a jail sentence.
  6. Question #6 of 26Question ID: 1269522
    Each self-regulatory organization (SRO) functions under the Securities and Exchange Commission's (SEC's) oversight and is accountable to the commission for enforcing federal securities laws. While the Municipal Securities Rule Board (MSRB) regulates all matters related to the underwriting and trading of state and municipal securities, it does not have enforcement powers of its rules. Which of the following does the MSRB rely on for enforcement of these rules?




    • D)
    • Explanation

    The MSRB regulates all matters related to the underwriting and trading of state and municipal securities but does not have enforcement powers. It depends on other SROs (e.g., FINRA) for the enforcement of its rules.
  7. Question #7 of 26Question ID: 1269519
    Accusations of Financial Industry Regulatory Authority (FINRA) Conduct Rule violations will heard and handled under the




    • A)
    • Explanation

    The Code of Procedure describes how member violations of the Conduct Rules will be heard and handled.
  8. Question #8 of 26Question ID: 1269513
    Should a member firm or an associated person be found in violation of Financial Industry Regulatory Authority (FINRA)'s Conduct Rules, a number of sanctions may be imposed. However, under the Code of Procedure, FINRA may not




    • B)
    • Explanation

    Only a court can issue a prison sentence. Each of the remaining answer selections, bar, fine, and censure, are sanctions FINRA could impose under the Code of Procedure.
  9. Question #9 of 26Question ID: 1269508
    Financial Industry Regulatory Authority (FINRA) regulates all matters related to investment banking, including




    • B)
    • Explanation

    FINRA regulates all matters related to investment banking (securities underwriting), trading in the OTC market, trading in NYSE-listed securities, and the conduct of FINRA member firms and associated persons.
  10. Question #10 of 26Question ID: 1289020
    Which of the following entities considers appeals of decisions made in department of enforcement (DOE) actions?




    • C)
    • Explanation

    The National Adjudicatory Council (NAC) hears appeals from DOE decisions. An NAC ruling may be appealed to the SEC, then to the appellate courts.
  11. Question #11 of 26Question ID: 1280033
    Which of the following sets of FINRA rules focuses on disputes in the industry and with customers who have filed a predispute agreement?




    • C)
    • Explanation

    The Code of Arbitration covers disputes over money between representatives, member firms, banks, and customers.
  12. Question #12 of 26Question ID: 1269516
    The Uniform Practice Code (UPC) establishes uniform trade practices pertaining to all of the following except




    • C)
    • Explanation

    The UPC established uniform trade practices and other guidelines for broker-dealers to follow when they do business with other member firms, including transaction settlement, good delivery, ex-dates, trade confirmations, and DK procedures.
  13. Question #13 of 26Question ID: 1269518
    All of the following are part of Financial Industry Regulatory Authority (FINRA)'s manual regarding employee conduct and reportable events except




    • C)
    • Explanation

    FINRA publishes the Conduct Rules, the UPC, the Code of Procedure, and the Code of Arbitration Procedure to regulate employee conduct and reportable events. There is no Sales Practice Code.
  14. Question #14 of 26Question ID: 1280032
    Which of the following sets of FINRA rules focuses on broker-dealers doing business with other broker-dealers?




    • A)
    • Explanation

    The Conduct Rules deal with a broker-dealer's (and representative's) relationship with the customer and the public. The Uniform Practice Code deals with interactions with other broker-dealers.
  15. Question #15 of 26Question ID: 1280034
    Which of the following sets of FINRA rules focuses on how member violations will be handled?




    • C)
    • Explanation

    The Code of Procedure covers improper acts by member firms and representatives.
  16. Question #16 of 26Question ID: 1269509
    Which regulatory body oversees trading in the over-the-counter (OTC) market?




    • D)
    • Explanation

    FINRA regulates all matters related to investment banking (securities underwriting), trading in the OTC market, trading in NYSE-listed securities, and the conduct of FINRA member firms and associated persons. FINRA also regulates investment companies and limited partnership transactions.
  17. Question #17 of 26Question ID: 1269517
    Financial Industry Regulatory Authority (FINRA)'s Conduct Rules are designed to promote




    • C)
    • Explanation

    The Conduct Rules specify trade practices that are fair and ethical when dealing with the public. Events that must be reported are also described.
  18. Question #18 of 26Question ID: 1269520
    If an arbitration agreement has not been signed, under which two of the following circumstances would a dispute between a Financial Industry Regulatory Authority (FINRA) member firm and a retail customer go to arbitration?

    The dispute cannot otherwise be resolved to the satisfaction of both parties.
    The customer requests that the dispute go to arbitration.
    The amount under dispute is less than $50,000.
    The FINRA director of arbitration so rules.



    • B)
    • Explanation

    Generally speaking, a broker-dealer firm has the customer sign a binding arbitration agreement before opening the account. In the absence of such an agreement, if a dispute cannot otherwise be resolved, the dispute can go to arbitration if the customer wishes it so.
  19. Question #19 of 26Question ID: 1269521
    Which of the following regulatory bodies regulates but has no enforcement powers?




    • A)
    • Explanation

    The MSRB regulates all matters related to the underwriting and trading of state and municipal securities. While they have the authority to write the MSRB rules and regulations, they have no enforcement powers.
  20. Question #20 of 26Question ID: 1269506
    Which of the following is a self-regulatory organization (SRO)?




    • B)
    • Explanation

    FINRA is considered the primary SRO in the securities industry.
  21. Question #21 of 26Question ID: 1269524
    While the Municipal Securities Rule Board (MSRB) writes the rules and regulations regarding underwriting and trading for municipal securities, it does not enforce those rules. Who does?




    • D)
    • Explanation

    While the MSRB has rulemaking authority, it has no authority to enforce those rules. The enforcement of the MSRB rules on broker-dealers has been primarily delegated to FINRA. Bank regulatory agencies, such as the Federal Reserve Board (FRB), enforce the MSRB rules on banks who act as municipal dealers.
  22. Question #22 of 26Question ID: 1280035
    Which of the following cannot enforce their own rules?




    • B)
    • Explanation

    The MSRB relies on FINRA and the SEC to enforce its rules for broker-dealers, and banking regulators to enforce their rules for banks.
  23. Question #23 of 26Question ID: 1269511
    Financial Industry Regulatory Authority (FINRA) staff must submit new rules and await approval from which of the following regulatory bodies prior to becoming effective?




    • A)
    • Explanation

    The MSRB, NYSE, and CBOE are deemed self-regulatory organizations (SROs) and are on an equal footing with FINRA. All SROs must first petition the SEC for approval of a new rule.
  24. Question #24 of 26Question ID: 1280030
    Which of the following is the largest self-regulating organization (SRO)?




    • D)
    • Explanation

    All broker-dealers in the United States who deal in corporate securities are required to be members of FINRA. The SEC has jurisdiction over all securities business in the United States, but it is not an SRO.
  25. Question #25 of 26Question ID: 1280036
    The MSRB has jurisdiction for making rules in all of the following cases except




    • D)
    • Explanation

    The MSRB makes regulations for broker-dealers and banks buying and selling municipal securities but does not have authority over the municipalities.
  26. Question #26 of 26Question ID: 1280031
    Which of the following sets of FINRA rules focuses on fair dealing with the public?




    • D)
    • Explanation

    The Conduct Rules deal with a broker-dealer's (and representative's) relationship with the customer and the public. The Uniform Practice Code deals with interactions with other broker-dealers.
Author
NancyShi
ID
354708
Card Set
P2U10
Description
Part 2 Unit10
Updated