FINRA Professional Standards and Ethics 3

Question 1

Under FINRA Rule 4512, member firms are required to make reasonable efforts to obtain which of the following for each non-institutional customer account?

Accepted Answer

Tax identification number, date of birth, employment status, and annual income

Answer

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

Question 2

Which of the following is an example of an unethical practice known as 'painting the tape'?

Accepted Answer

Executing wash sales among related accounts to create the appearance of active trading

Answer

Painting the tape involves executing fictitious trades among related parties to create artificial trading volume and give a false impression of market activity.

Question 3

A registered representative who is subject to a statutory disqualification may still be associated with a FINRA member firm if:

Accepted Answer

FINRA approves a membership continuance application or eligibility proceeding

Answer

A person subject to a statutory disqualification can only remain associated with a member firm if FINRA approves an eligibility proceeding under FINRA Rule 9522.

Question 4

FINRA Rule 2241 governs research analyst conflicts of interest. Which of the following is required under this rule?

Accepted Answer

Research reports must disclose whether the firm makes a market in the covered security

Answer

Rule 2241 requires disclosure of material conflicts, including whether the firm makes a market in the security covered in the research report.

Question 5

A customer files a written complaint alleging that a registered representative misappropriated $500 from their account. The member firm is required to:

Accepted Answer

Acknowledge the complaint and investigate within required timeframes under firm procedures

Answer

Member firms must have procedures for acknowledging and addressing written customer complaints in a timely manner, though regulatory reporting thresholds and timing depend on the specific facts.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Professional Standards and Ethics 3