FINRA Safety and Compliance 2

Question 1

Under FINRA Rule 3110, how often must a member firm conduct inspections of its non-OSJ branch offices?

Accepted Answer

At least every three years

Answer

FINRA Rule 3110 requires member firms to inspect non-OSJ branch offices at least every three years.

Question 2

Which of the following best describes 'selling away' under FINRA rules?

Accepted Answer

A registered representative selling securities outside the scope of their employment without firm approval

Answer

Selling away occurs when a registered representative sells securities not held or offered by their member firm without prior written approval.

Question 3

A customer complains that a registered representative churned their account. Which element is NOT required to prove churning?

Accepted Answer

The customer suffered a net loss

Answer

Churning can occur even if the customer did not suffer a net loss, as long as trading was excessive and unsuitable.

Question 4

Under FINRA Rule 4512, how long must member firms retain customer account records?

Accepted Answer

6 years

Answer

FINRA Rule 4512 requires customer account records to be retained for at least six years.

Question 5

What is the purpose of a 'red flag' checklist in a firm's AML program?

Accepted Answer

To identify indicators of potentially suspicious or money-laundering activity

Answer

Red flag checklists help compliance staff identify transaction patterns or account behaviors that may indicate money laundering or other financial crimes.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Safety and Compliance 2