FIA Regulatory Compliance & Ethics 5

Question 1

Under SEC Rule 10b-5, which element is NOT required to establish a securities fraud claim?

Accepted Answer

That the defendant profited from the fraudulent activity

Answer

Profit by the defendant is not a required element of a Rule 10b-5 claim; the key elements are materiality, scienter, reliance, and connection to a securities transaction.

Question 2

FINRA's Office of Dispute Resolution (ODR) primarily handles disputes through:

Accepted Answer

Arbitration and mediation proceedings

Answer

FINRA's ODR administers arbitration and mediation proceedings to resolve disputes between investors and broker-dealers outside of court.

Question 3

A financial professional is asked by a colleague to recommend a client's money to invest in a private deal in which the colleague has an undisclosed financial interest. Accepting this arrangement without disclosure would violate:

Accepted Answer

Anti-kickback and conflict of interest standards

Answer

Recommending an investment where a colleague has an undisclosed financial interest creates an undisclosed conflict that violates anti-kickback rules and conflict of interest ethical standards.

Question 4

The Foreign Corrupt Practices Act (FCPA) prohibits US persons and companies from:

Accepted Answer

Bribing foreign government officials to obtain or retain business

Answer

The FCPA makes it unlawful for US persons and businesses to bribe foreign government officials for business advantages.

Question 5

Under Regulation Best Interest (Reg BI), which of the following is a required component of a broker-dealer's obligation to retail customers?

Accepted Answer

Acting in the best interest of the customer without placing the firm's interests ahead

Answer

Reg BI requires broker-dealers to act in the best interest of retail customers at the time of a recommendation, without placing their own interests ahead of the customer's.

(FIA) Financial Information Associate Certification Practice Test

(FIA) Financial Information Associate Certification Practice Test

FIA Regulatory Compliance & Ethics 5