Communication and Documentation Flashcards

Under FINRA Rule 4512, a member firm must make reasonable efforts to obtain which information when opening a non-institutional customer account?

Answer: Customer's date of birth, employment status, and investment objectives

FINRA Rule 4512 requires firms to collect essential customer profile information including date of birth, employment status, annual income, net worth, and investment objectives.

A firm receives an order from a customer and the trade is executed. The trade confirmation sent to the customer must include which piece of information?

Answer: Whether the firm acted as agent or principal in the transaction

Trade confirmations must disclose whether the firm acted as agent (broker) or as principal (dealer) in the transaction, as this affects the customer's understanding of compensation and conflicts.

Under FINRA Rule 2232, what must a firm disclose to retail customers in connection with fixed income transactions?

Answer: The mark-up or mark-down on fixed income transactions

FINRA Rule 2232 requires firms to disclose mark-ups and mark-downs on retail fixed income transactions on customer confirmations.

When a customer requests to change their account's investment objectives on record, the registered representative should:

Answer: Update account records and document the change as instructed by the customer

Changes to customer account information, including investment objectives, must be documented and the records updated promptly to reflect the customer's current instructions.

A registered representative discusses a new investment product via a recorded phone call with a retail customer. Under FINRA communication standards, which statement is accurate?

Answer: The communication must still meet fair and balanced content standards even if recorded

All communications with customers, regardless of medium, must comply with FINRA's content standards for fairness, accuracy, and balance.

Under FINRA rules, a member firm's written supervisory procedures (WSPs) related to communications must be:

Answer: Kept current, reviewed regularly, and made available to FINRA upon request

Written supervisory procedures must be kept up-to-date, reviewed for adequacy, and be available for FINRA inspection upon request.

A firm files a retail communication with FINRA's Advertising Regulation Department. FINRA may require the firm to make changes. If the firm disagrees with FINRA's required changes, the firm must:

Answer: Either make the required changes or withdraw the communication from use

When FINRA requires changes to a filed communication, the firm must either make those changes or discontinue use of the communication; it cannot continue using non-compliant material while appealing.