Which of the following statements about the over-the-counter market is true?
A. Only penny stocks are traded in the over-the-counter market.
B. Trades in the over-the-counter market are conducted via the auction process.
C. Only bonds and other debt instruments are traded in the over-the-counter market.
D. Stocks that are listed on exchange floors are also traded in the over-the-counter market.
Jill worked as a registered representative with GoForBroke Broker-Dealers for 8 years. She is married to Jack, whose job made it necessary for them to relocate to Thailand for 3 years. They have now returned, and Jill would like to begin working as a registered representative with GoForBroke again after her 3 -year hiatus. Given this scenario:
A. Jill can begin working in her previous position with GoForBroke immediately, but GoForBroke will have to register her as one of its representatives with FINRA within 30 days of her hire date, and Jill will have to pay the applicable filing fees within that same period of time.
B. Jill will have to retake the qualifying FINRA exams for her position, and after she has done so successfully, GoForBroke must register her with FINRA as one of its representatives.
C. As long as GoForBroke maintained Jill as a registered representative for its firm during her hiatus, Jill can begin working in her previous position immediately. There is no need to file additional paperwork or pay any fees to FINRA.
D. Both A and C are true statements.
After three warnings, Honest Broker-Dealer was forced to terminate Sly Conman, one of its representatives, for making inaccurate statements when offering its mutual fund products to customers.
After his registration is terminated:
A. Mr. Conman can apply for reinstatement of his license after 12 months.
B. Mr. Conman remains under the jurisdiction of FINRA for a period of 1 year.
C. Mr. Conman remains under the jurisdiction of FINRA for a period of 2 years.
D. Mr. Conman can apply for reinstatement of his license after 6 months, but will have to pay any applicable fees and retake a test.
After passing the Series 6 and becoming a registered representative, you will be able to execute transactions in which of the following securities?
I. corporate stocks
II. mutual funds
III. corporate bonds
IV.
variable contracts
A.
I, II, III, and IV
B.
I, II, and IV only
C.
II and III only
D.
II and IV only
Joe Cool is a member of the All Greek Fraternity. A few of the alumni of his fraternity sat for the FINRA Series 6 exam over the past couple of years and, using their cell phones, took pictures of the exam questions. They forwarded these to their fraternity to be included in the test bank file the fraternity keeps in its study room.
Have there been any violations of FINRA/NASD rules in this instance?
A. No. It is standard practice for sororities and fraternities to compile test banks of old exams, and since the forwarded tests are not copies of an actual future exam that will be administered, there has been no violation of any rules.
B. Yes. It is a violation of Rule 2110 for an exam-past or present-to be reproduced and distributed for study purposes.
C. No. Rule 2110 only prohibits the reproduction and distribution of a previously administered FINRA exam for study purposes if the exams are being sold. As long as there is no compensation involved, a violation has not been committed.
D. Both A and C are true statements.
After three warnings, Honest Investments was forced to terminate Sly Conman, one of its representatives, for making inaccurate statements when offering its mutual fund products to customers. Given this scenario:
A. Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 30 days of the filing.
B. Honest must provide FINRA with an electronic notification of the termination within 30 days and provide a written copy of the submitted form to Mr. Conman within that same period of time.
C. Honest must provide FINRA with an electronic notification of the termination within 48 hours and provide a written copy of the submitted form to Mr. Conman within 10 business days.
D. Honest must provide FINRA with an electronic notification of the termination within 48 hours and mail a written copy of the submitted form to both FINRA and Mr. Conman within 14 days.
Mr. Donald is the owner and CEO of Just Ducky Broker-Dealers. His wife, Ms. Daisy, handles all the ministerial duties for the firm. The firm has three other employees. Huey is the municipal bond specialist and handles client trades in municipal securities only; Dewey handles only mutual fund sales for clients; Louie handles all aspects of client trading in stocks, corporate bonds, and options.
Which of the following statements regarding the minimum FINRA registration requirements for these individuals is true?
A. Mr. Donald, Huey, Dewey and Louie must all be registered as general securities representative s in accordance with FINRA rules.
B. Mr. Donald, Ms. Daisy, Dewey and Louie must be registered as general securities representatives, and Huey must be registered as a limited securities representative under FINRA rules.
C. Under FINRA rules, Mr. Donald must register as a principal, Dewey must be registered as a limited securities representative, and Louie must be registered as a general securities representative. Daisy and Huey need not be registered.
D. Mr. Donald and Ms. Daisy must be registered as principals, and the other three must be registered as general securities representatives under FINRA rules.
Which of the following is not one of the purposes of FINRA as stated in its articles of incorporation?
A. maintain a fair and orderly securities market
B. encourage members to uphold high ethical standards
C. develop lines of communication between the securities industry and governmental agencies
D. police members and assist with dispute settlements
Ms. Ears is an investment adviser representative. During lunch today, she overheard two men talking about a hostile takeover that their firm was preparing to undertake. Based on this information, Ms. Ears does not hesitate to advise the client she meets with immediately after lunch--Mrs. Clueless-- to invest a sum of money in the firm the men had named as the target firm. Ms. Ears remembers that the price of target firms, on average, increases significantly with an announcement of this sort, but she does not inform Mrs. Clueless of the reason underlying her recommendation.
Has there been any violation of insider trading laws in this scenario, as described?
A. No. The scenario does not suggest that Ms. Ears herself made any investment in the target firm, and Mrs. Clueless was not made aware of the basis for Ms. Ears’ recommendation.
B. Yes. In making a recommendation based on information that was not publicly available, Ms. Ears has violated insider trading laws and is subject to both civil and criminal penalties.
C. No. Ms. Ears is not considered to be an insider of the company preparing the hostile takeover.
D. Yes. Both Ms. Ears and the two men have violated insider trading laws. The two men are prohibited from discussing such private information in a public setting, and Ms. Ears is prohibited from making a recommendation based on that information.
Which of the following statements regarding insider trading penalties is true?
A. The SEC may seek both civil and criminal penalties against an individual who is found guilty of insider trading.
B. Any contemporaneous trader who has lost money due to an illegal insider trade may sue the violator for both the amount of his losses and pain and suffering, as determined by the court.
C. A broker-dealer who is found to have provided inadequate supervision over an agent who is found guilty of insider trading is also subject to insider trading penalties.
D. Both A and C are true statements.
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