FREE SIE Regulatory Framework Questions and Answers
A formal definition of a customer complaint, as per FINRA regulations, is:
Customer complaints are only recognized as such under FINRA regulations if they are submitted in writing. Social media posts and text messages fall under this category. Member companies have thirty calendar days from the date on which they became aware—or should have become aware—that the company or a related party is the target of a written customer complaint alleging forgery, theft, or misuse of money or securities.
Which of the following claims regarding broker-dealer staff is accurate?
I. All staff members are allowed to accept customer orders for securities subject to specific restrictions.
II. Customers' orders for securities may be accepted by staff members who have registered as securities dealers.
III. Customers' phone messages may be answered by non-registered staff members and forwarded to a registered representative for appropriate processing.
IV. In compliance with SEC guidelines, all workers who handle money or securities in any capacity are required to submit to fingerprinting.
Every response is accurate, with the exception of mine. It is forbidden for employees to accept orders for securities from clients if they do not possess the required securities license.
The securities laws of any state in the union may be slightly different from the laws of other states. These state securities laws are most frequently referred to collectively as:
The most well-known term for state securities laws and regulations is "blue-sky" law. In order to offer securities in a given state, registered representative applicants must often take and pass the Series 63 state securities law test in addition to the relevant qualifying exam.
Candidates must include information regarding their OBAs (also known as: ) on the Form U4.
Owning rental property, doing weekend wedding band gigs, and engaging in any other work that could bring in money outside of being a registered representative of the member firm are examples of outside business endeavors. The representative's personal account investments would not be included in this section.
According to FINRA regulations, a private securities transaction is one in which:
A registered representative must obtain prior written consent from their member firm before engaging in any securities transaction that falls outside the ordinary purview of their job with the firm. Participating in the private securities transaction without such authorization would be a major infraction, particularly if the registered representatives were to be compensated for their efforts.
Which of these situations requires the filing of a Form U5?
One of our favorite ways to describe Forms U4 and U5 is this: U4 is like saying ""hello,"" and U5 is like saying ""goodbye."" Regardless of the situation, when a registered representative is no longer required to be registered, their employing member firm must file the Form U5 with FINRA. A Form U4 file will be made on behalf of the registered representative in the event that they later affiliate with another firm or even reaffiliate with their former one.
Items valued at no more than the following are the maximum gifts or gratuities that registered representatives may provide to consumers in a given year:
FINRA Rule 3220 prohibits member businesses and their affiliated individuals from providing any customer with gifts worth more than $100 annually.
Political contributions made by covered associates of member firms are restricted under FINRA pay-to-play regulations. For covered associates with voting rights at the time of the donation, the maximum contribution is set at:
The rule recognizes that there is typically a primary followed by a general election, which is why it sets the cap at $350 per election rather than annually. Contributions are limited to $350 for the primary and an additional $350 for the general election. Businesses must keep books and documents attesting to their adherence to pay-to-play regulations.
In addition to the official in-house continuing education programs that all FINRA member companies must set up for their registered people, FINRA has standards for registered representatives regarding CE that are known as:
Every three years after the first anniversary of a registered representative's original registration date, and within 120 days of that anniversary, FINRA conducts Regulatory Element training sessions.
In the event that a consumer complaint proceeds to an arbitration hearing, the panel's decision:
Arbitration panel decisions are final and enforceable against all parties; they cannot be challenged.
Filling out Form U4 is necessary for those who want to register with FINRA; FINRA reviews and approves the forms. Candidates who have specific issues on their record—referred to as follows in FINRA rules—will not be authorized.
Any felony convictions within the last ten years as well as specific misdemeanors involving money or securities during that same time frame are considered statutory disqualifications. Generally speaking, those who are disqualified are not eligible to join or associate with FINRA.