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Series 26 Test
Main points from Kaplans Series 26 LEM
| TERM | DEFINITION |
|---|---|
| OSJ | OSJ stands for Office of Supervisory Jurisdiction, which is an office that supervises other offices and agents within a region. OSJs are responsible for a number of activities, including |
| Holding Customer mail | max 3 months for an ACCEPTABLE REASON |
| BCP | Disclosed to customers IN WRITING at account opening. Approve by principal, and mailed to customer |
| Lifetime Records | S Stock cert book P Partnership articles A Articles of Inc M Minutes from mtngs |
| 6 year Records | Blotters, general ledgers, stock records, cust. ledgers/statements, cust. acct, records, Principal designation records |
| 4 year Records | Customer written complaints |
| FINRA may require a member firm or an associated person to | -Provide information orally & writing -Give testimony under oath -Provide access to records for investigation -Provide access to customer account for investigation |
| If a security is sold by the estate of a deceased person...who signs for "good delivery"? | Executor of Estate |
| FINRA's fidelity bonding requirements | amount of the bond is based on the firm's net capital requirement Minimum coverage is 120% of the net capital requirement or $100,000, whichever is greater |
| occasional presentations that assist in training registered representatives do not require a ____________________. | principal's license Just Series 6 or 7 |
| Nonsupervisory branch offices must be inspected at least once every ___ years by an arm's-length supervisor. | 3 ; "Arms Length" = By a supervisor not directly involved in the branch's operations |
| Branch Office Manager responsibilities | Approve all transactions, annual review of compliance w/ RRs, review all correspondence |
| A complaint file is required only in an ___________ of __________ ____________. | office of supervisory jurisdiction |
| Code of Arbitration Procedure was created to: | provide procedures for settling disputes that arise among BDs, RRs, and the public. |
| Supervisory reviews over customer account activity must be performed by which of the following? | A person senior to the production manager being reviewed |
| Protection of customer confidential information is an obligation of which of the following? | ANYONE touching their info + customer themselves |
| The filing of the claim in a dispute is called the __________________: | statement of claim |
| Blotters are prepared by member firms ____ | Daily |
| SEC Rule 17a-4 requires a broker-dealer to retain its records in a readily accessible location for the most recent ______ years | 2 |
| Claims alleging employment __________ or _____________ are not required to be arbitrated unless the parties agree. | employment discrimination & sexual harassment |
| Minutes of the directors' meetings must be kept for _______ | lifetime of firm |
| records of original entry must be kept for _______ | 6 years |
| Complaint information must be furnished to FINRA by the _____ day of the month the following ________ in which the complaints are received. | 15th & quarter |
| Fidelity Bonding 2 things | -Protects customers from fraud and embezzlement -minimum coverage is 120% of net capital or $100,000, whichever is greater |
| Explain a fidelity bond | Insurance bond that protects BDs from losses due to employee theft or embezzlement |
| The minimum NC requirement for an established carrying firm is | $250,000 or 1/15 of AI, whichever is greater |
| subordinated loan | a loan made to the firm for net capital purposes |
| Standard subordinated loan: | minimum 1year term; in writing; generally filed with FINRA 10 days before the effective date. |
| Member firms are permitted no more than ____ temporary subordinated loans per year The maximum duration is ____ | 3 45 days |
| The guideline for temporary subordinated loan agreements is filing with FINRA ____ days before their effective date. | 10 |
| Member firms must file electronic FOCUS reports on a ____ and/or ______ basis, and on an ______ basis, with FINRA. | monthly, quarterly annual |
| designated examining authority (DEA) | broader term that includes FINRA and other regulators with enforcement powers |
| Credit unions and savings and loans (are/are'nt) good control locations. | are not |
| A broker-dealer that sells only investment company shares on a subscription basis has a minimum net capital requirement of ______ | $5,000 |
| Common stock haircut | 15% |
| IPO Haircut | 30% |
| Securities w/ limited trading market | 40% |
| securities w/ no market makers other than the firm | 100% |
| establish firm aggregate indebtedness ratio | 15:1 |
| 1st year firm aggregate indebtedness ratio | 8:1 |
| A registered representative is statutorily disqualified. For how many years will this person be disqualified from associating with a FINRA member firm? | 10 years |
| Rule 3210 requires notifications of new accounts being opened that will purchase _________ or ____________ | stocks or closed-end investment company shares |
| Can a Series 26 limited principal supervise the sale of variable contracts? Yes or No | Yes |
| How often must your firm perform account updates for its customers? | Every 3 years |
| Introducing broker-dealers that do not receive customer cash or securities have a ________ net capital requirement. | $5,000 |
| An early warning report must be filed by an established broker-dealer under SEC Rule 17a-11 if its AI is in excess of _________ of its NC? | 1,200% |
| An employee of a FINRA member firm wishes to open an account at another member firm - is permission required? | No, just notice |
| When opening a cash account at a broker-dealer, the member firm is required to document | a retail investor’s Social Security number. |
| Generic Advertisment means that the security ________ | Better be for sale! |
| Season Tickets to sport events are considered excessive and violate the _________ ______________? | Conduct Rules |
| Umta allows the ________ to reimburse himself for reasonable expenses incurred in handling the account? | custodian (even if the donor) |
| "OCCASIONAL" presentations only require a _______ or _______ license not a _________ license. | 6 or 7; not a principal license |
| Under Rule 17a-5, an accountant who conducts an audit of a broker-dealer must: (2 things) | be independent & not affiliated w/ the broker |
| Can aa statement of fact be misleading? How? | Yes, if it is made in the wrong way that is confusing or misleading!\ |
| Checkbooks and bank statements must be maintained for ________ years. | 3 |
| When must a registered principal approve each new account in writing? | at the latest promptly after the first transaction in the account. |
| Static content requires _____ | approval |
| Can you trade on margin in fiduciary accounts? | NO Trading on margin is prohibited in fiduciary accounts except under special circumstances and with the appropriate documentation. |
| Rule 482 (mutual fund tombstone) advertisements | bare bones, standalone ad, no offer to invest included |
| a registered representative investing in a real estate direct participation plan (DPP) would nOT fall under the definition of a _______ ____________ _______ | private securities transaction |
| The appeal of a decision rendered under the Code of Procedure comes initially under the jurisdiction of the: | National Adjudicatory Council |
| For new broker-dealers, debt may not exceed _____% of equity. After the first year, debt may be as much as ______% of equity. | 800% & 1,500% |
| Does a pre-recorded audio/video work for annual complaince review? | No |
| Person | a natural person (an individual), company, government, or political subdivision, agency, or instrumentality of a government. any natural person or entity that has the legal capacity to open a brokerage account. |
| Broker | any person engaged in the business of effecting transactions in securities for the accounts of others. |
| Dealer | any person engaged in buying and selling securities for its own account, either through a broker or otherwise, as part of a regular business. |
| On the exam, the term most often used to describe a securities firm is ________? | broker-dealer since in some transactions they may act in an agency capacity (broker) and in others as a principal in the trade (dealer). |
| Are Index Annuties considered securities? | No |
| Associated persons POD-BCE | P - Partner O - Officer D - Director B - Branch manager or similar function C - Control (person controlling, controlled by, or under common control) E - Employee (except clerical/ministerial staff) |
| Form BR | Firms must register each of their branch offices with FINRA, the New York Stock Exchange (NYSE), and states that require branch registration when acting as a BRANCH OFFICE |
| Info required on Form U4 (NRA-FAM) | N -Name, address, and aliases R -Residency history (5 yr) A -Arrest and conviction info (felonies/misdemeanors related to investments) F -Firm acknowledgment of arbitration requirement A -Acknowledgment signed by the AP M -Most recent 10-yr work hist |
| info on education & marital status is | NOT INCLUDED on Form U4 |
| The new employer may request a copy of ________ directly from the new employee, who must produce it within ____ business days of the request. | Form U5 ; 2 |
| If a member learns that information it filed on Form U5 is inaccurate or incomplete, it must file an amended Form U5 in _____ | 30 days |
| Another name for Securities Act of 1933 | Paper Act ; Primary markets |
| Another name for Securities Act of 1934 | People & Places act ; secondary markets |
| Affiliated person | -Anyone w/ 5% or more of the outstanding voting securities of an investment company -officer, director, partner, co-partner, or employee; or an investment adviser or member of the advisory board of an investment company |
| Changes that require shareholder voting | B-SLIC-I B: Borrowing S: Sales load policy L: Line of business I: Investment policy (shifting from income to growth) C: Classification (open-end to closed-end, diversified to non-diversified) I: Issuing securities or underwriting other securities |
| order of expungement | a court order that directs FINRA to remove customer dispute information from a registered representative's CRD must a court of competent jurisdiction directing such expungement or confirming an arbitration award containing expungement relief is required. |
Created by:
Mlowrie1
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