Communication and Documentation Flashcards

FINRA Rule 4511 requires member firms to preserve most broker-dealer records for a minimum of how many years?

Answer: 6 years

FINRA Rule 4511 generally requires member firms to preserve books and records for a minimum of six years.

Which type of record must be kept readily accessible for the first two years of the required retention period under SEC Rule 17a-4?

Answer: All required records subject to the rule

SEC Rule 17a-4 requires all records subject to retention be kept in an easily accessible place for the first two years of the required retention period.

A customer disputes a trade that occurred four years ago. The firm's records from that period were destroyed two years into retention. Which statement best describes the firm's situation?

Answer: The firm has violated recordkeeping rules since most records must be kept six years

Destroying records after two years when the required retention period is six years constitutes a recordkeeping violation under FINRA Rule 4511 and SEC Rule 17a-4.

Under FINRA rules, which document must be provided to a customer at or before the completion of a securities transaction?

Answer: A trade confirmation

FINRA and SEC rules require that a written trade confirmation be sent to customers at or before completion of each securities transaction.

A registered representative sends a text message to a client discussing a recommended trade. Under FINRA recordkeeping rules, this text message:

Answer: Must be retained as a business communication record

All business communications, regardless of medium or device, must be captured and retained pursuant to FINRA and SEC recordkeeping requirements.

FINRA Rule 4370 requires firms to maintain written business continuity plans. Which element is NOT explicitly required in these plans?

Answer: Employee profit-sharing formulas

Business continuity plans must address operational recovery topics such as data backup, communications, and annual review—not internal HR matters like profit-sharing.

Under SEC Rule 17a-4, electronic records stored by broker-dealers must be maintained in a format that is:

Answer: Non-rewriteable and non-erasable (WORM format)

SEC Rule 17a-4(f) requires electronic records to be stored in a non-rewriteable, non-erasable (WORM) format to prevent alteration.