Stock Broker Securities Regulations & Compliance 2

Question 1

What is the 'know your customer' (KYC) obligation primarily designed to prevent?

Accepted Answer

Money laundering and fraud

Answer

Excessive trading

Answer

Margin calls

Answer

Short selling

Question 2

A registered representative who recommends unsuitable investments to a customer may violate which FINRA rule?

Accepted Answer

FINRA Rule 2111

Answer

FINRA Rule 2010

Answer

FINRA Rule 4512

Answer

FINRA Rule 3110

Question 3

What does 'churning' refer to in the context of broker-dealer regulations?

Accepted Answer

Excessive trading in a customer account to generate commissions

Answer

Failing to deliver securities on time

Answer

Trading on insider information

Answer

Unauthorized borrowing of customer funds

Question 4

Under FINRA rules, what is the maximum annual contribution an employee of a member firm may give to a municipal securities issuer official who can influence the firm's business?

Accepted Answer

$250

Answer

$100

Answer

$500

Answer

$1,000

Question 5

Which act requires broker-dealers to file Suspicious Activity Reports (SARs) for transactions that may involve money laundering?

Accepted Answer

Bank Secrecy Act

Answer

Sarbanes-Oxley Act

Answer

Dodd-Frank Act

Answer

Patriot Act

Question 6

What is the purpose of FINRA's arbitration forum for disputes between customers and broker-dealers?

Accepted Answer

To provide an alternative to court litigation for resolving disputes

Answer

To replace criminal prosecution of brokers

Answer

To set commission rates

Answer

To issue trading licenses