Series 24 – General Securities Principal Exam Supervision & Principal Oversight 1 — Questions and Answers
Question 1: Under FINRA rules, who is primarily responsible for supervising the activities of registered representatives?
- The compliance officer
- The designated principal (Correct answer)
- The CEO
- The branch manager
Correct answer: The designated principal
The designated principal is primarily responsible for supervising registered representatives and ensuring compliance with applicable rules.
Question 2: A General Securities Principal discovers that a registered rep has been recommending unsuitable investments. What is the principal's FIRST required action?
- File a SAR immediately
- Conduct an investigation and take corrective action (Correct answer)
- Terminate the representative
- Notify the SEC directly
Correct answer: Conduct an investigation and take corrective action
The principal must first conduct a prompt investigation and take appropriate corrective action to address the suitability violation.
Question 3: Which document outlines the firm's supervisory procedures and is required under FINRA Rule 3110?
- Form U4
- Written Supervisory Procedures (WSP) (Correct answer)
- Annual Compliance Report
- Broker-Dealer Agreement
Correct answer: Written Supervisory Procedures (WSP)
FINRA Rule 3110 requires every member firm to establish and maintain Written Supervisory Procedures (WSP) tailored to its business.
Question 4: How often must a FINRA member firm conduct an inspection of each office of supervisory jurisdiction (OSJ)?
- Monthly
- Quarterly
- Annually (Correct answer)
- Every two years
Correct answer: Annually
FINRA Rule 3110 requires at least annual inspections of each OSJ to ensure compliance with applicable rules.
Question 5: A principal reviews and approves all new account forms. This activity is an example of which supervisory function?
- Risk assessment
- Correspondence review
- New account approval (Correct answer)
- Order review
Correct answer: New account approval
Reviewing and approving new account forms is the new account approval supervisory function assigned to a qualified principal.
Question 6: Under FINRA Rule 3110, which type of office requires direct on-site supervision by a registered principal?
- Non-branch location
- Office of Supervisory Jurisdiction (OSJ) (Correct answer)
- Remote office
- Satellite branch
Correct answer: Office of Supervisory Jurisdiction (OSJ)
An Office of Supervisory Jurisdiction (OSJ) requires on-site supervision by a registered principal due to its supervisory responsibilities.
Series 24 – General Securities Principal Exam Supervision & Principal Oversight 1
Under FINRA rules, who is primarily responsible for supervising the activities of registered representatives?