Series 99 Regulatory Compliance & Reporting 2 — Questions and Answers
Question 1: Under FINRA Rule 4511, broker-dealers must preserve books and records for a minimum of how many years?
- 3 years
- 5 years
- 6 years (Correct answer)
- 10 years
Correct answer: 6 years
FINRA Rule 4511 generally requires broker-dealers to preserve required books and records for a minimum of six years.
Question 2: Which regulatory report must a broker-dealer file to notify FINRA of material changes to its financial or operational condition?
- Form BD
- FOCUS Report (Correct answer)
- Form U4
- SAR
Correct answer: FOCUS Report
The FOCUS (Financial and Operational Combined Uniform Single) Report is used to report a firm's financial and operational condition to FINRA.
Question 3: A firm discovers an associated person has been convicted of a felony. Under FINRA Rule 4530, the firm must report this event within:
- 10 calendar days
- 30 calendar days (Correct answer)
- 60 calendar days
- 90 calendar days
Correct answer: 30 calendar days
FINRA Rule 4530 requires firms to report certain events, including felony convictions of associated persons, within 30 calendar days of the event.
Question 4: Which of the following is NOT required to be included in a Suspicious Activity Report (SAR) filed with FinCEN?
- The amount of the suspicious transaction
- Identity of the subject if known
- The social security number of the compliance officer (Correct answer)
- Description of the suspicious activity
Correct answer: The social security number of the compliance officer
SARs require details about the suspicious activity, amounts, and subject identity if known, but do not require the SSN of the compliance officer.
Question 5: Under SEC Rule 17a-11, a broker-dealer must notify the SEC when its net capital falls below the minimum required amount within:
- 24 hours (Correct answer)
- 48 hours
- 3 business days
- 5 business days
Correct answer: 24 hours
SEC Rule 17a-11 requires broker-dealers to immediately notify the SEC within 24 hours if their net capital falls below required minimums.
Question 6: What is the primary purpose of FINRA's Order Audit Trail System (OATS)?
- To monitor insider trading
- To reconstruct the lifecycle of equity orders (Correct answer)
- To report customer complaints
- To track margin account balances
Correct answer: To reconstruct the lifecycle of equity orders
OATS was designed to allow FINRA to reconstruct the full lifecycle of equity orders from receipt through execution, cancellation, or expiration.
Question 7: A broker-dealer's annual compliance report under FINRA Rule 3130 must be signed by:
- The Chief Compliance Officer only
- The CEO or equivalent senior manager (Correct answer)
- A registered principal and the CFO
- The Board of Directors collectively
Correct answer: The CEO or equivalent senior manager
FINRA Rule 3130 requires the CEO (or equivalent) to certify the firm's compliance with FINRA rules in the annual report.
Series 99 Regulatory Compliance & Reporting 2
Under FINRA Rule 4511, broker-dealers must preserve books and records for a minimum of how many years?