Connect with Us!
SIE Module 12 Test Bank
Page 1 of 4
In addition to federal securities laws, each state has its own securities laws intended to protect the public from fraud. These state securities laws are often referred to as:
A. Blue sky laws.
B. Regulatory rulings.
C. Market improvement regulations.
D. Red herrings.
Which one of the following statements is correct regarding non-registered persons?
A. Non-registered persons are in the direct service of soliciting customers.
B. Non-registered persons are typically paid through commissions resulting from the sales of securities.
C. Non-registered persons can contact customers to ask them if they would like to receive literature from a registered firm.
D. Non-registered persons are not required to register with the SEC, but they are required to register with FINRA.
A non-registered person can contact a potential customer to:
A. Pre-qualify the customer.
B. Ask if the customer would like to speak to a registered individual.
C. Discuss investment products.
D. Create and implement an asset allocation.
A registered principal or registered representative must retake a qualifying exam if his or her registration has been revoked or terminated for:
A. 6 months or more.
B. 1 year or more.
C. 2 years or more.
D. 3 years or more.
Which one of the following actions can only be performed by a person registered with FINRA?
A. Encouraging a person to purchase a specific security.
B. Inquiring if a person would like to receive printed materials about investments.
C. Asking a person if they would like to speak with a registered individual.
D. Inviting a person to an event sponsored by the firm.
Which one of the following is required to be a member of FINRA?
A. A corporation that is offering their stock in an IPO.
B. A public official that is attempting to be appointed to the federal reserve.
C. A financial institution that wants to make loans to a governmental entity.
D. A firm that would like to take orders for securities.
Tommy is associated with a FINRA member. His only job responsibility is facilitating transactions involving publicly traded securities on the New York Stock Exchange. Is Tommy required to register with FINRA?
A. Yes, because he is affiliated with a FINRA member.
B. Yes, because he engages in securities transactions.
C. No, because he is registered with the New York Stock Exchange.
D. No, because he only trades publicly traded securities.
Annual continuing education training provided by member firms is known as:
A. Regulatory Training.
B. Firm Element Training.
C. Annual Compliance Education.
D. Continuing Professional Education.
Which one of the following statements is correct regarding FINRA background checks?
A. The background check regulations do not require member firms to investigate the good character, business reputation, and qualifications of applicants.
B. Member firms are required to conduct the background checks themselves.
C. A “reasonably available public records” search for information contained in U4 must be conducted prior to submitting the U4.
D. Organizations must have documented procedures for collecting information and conducting background checks.
All of the following represent requirements for a partner, director, officer or employee to be EXEMPT from fingerprinting requirements, EXCEPT:
A. The person is not engaged in the sale of securities.
B. The person does not regularly have access to the keeping, handling, or processing of securities.
C. The person does not have direct supervisory responsibilities over any employees.
D. The person only facilitates the purchase and sale of mutual funds.
Page 2 of 4
If a brokerage firm wants to hire an individual subject to statutory disqualification, FINRA requires the member firm to complete a:
A. Notice filing.
B. Consent to Service of Process.
C. Membership Continuance Application.
D. Form U5.
If a FINRA member has filed for bankruptcy within the last 10 years, this could lead to:
A. Statutory disqualification.
C. Treble damages.
D. Notice filing.
Which one of the following is part of the FINRA continuing education requirements?
A. State element.
B. Regulatory element.
C. Express element.
D. Regional element.
The Regulatory Element of FINRA’s CE program requires all registered individuals to complete a computer-based training session within:
A. 30 days of the first anniversary of their initial registration date and every two years thereafter.
B. 90 days of the second anniversary of their initial registration date and every two years thereafter.
C. 120 days of the second anniversary of their initial registration date and every three years thereafter.
D. 180 days of the third anniversary of their initial registration date and every five years thereafter.
Roscoe is an investment adviser living and practicing in California. He currently has assets under management of $105,000,000. Which one of the following best represents Jorge’s registration requirements?
A. He is required to register both with the SEC and California.
B. He is required to register with the SEC.
C. He is required to register with California.
D. He can choose to register with the SEC or California.
An Investment Adviser firm wishes to terminate its registration with the SEC. Which one of the following forms should be completed and submitted to fulfill this objective?
A. Form U4.
B. Form ADV-E.
C. Form BD.
D. Form ADV-W.
Which one of the following forms is filed by a broker/dealer to terminate an agent’s registration?
A. Form ADV.
B. Form 1065.
C. Form U4.
D. Form U5.
Form U4 is the:
A. Uniform Disciplinary Action Reporting Form.
B. Uniform Application for Securities Industry Registration or Transfer.
C. Uniform Termination Notice for Securities Industry Registration.
D. Uniform Application for Investment Adviser Registration.
Which one of the following statements is correct regarding Form U4?
A. Personal information contained in Form U4 is not available to the general public.
B. Registered individuals must file an updated Form U4 annually with the state securities Administrator in the state where the individual is registered.
C. Applicants must disclose information about certain criminal charges and convictions, including disclosure of all felony convictions and certain misdemeanor convictions.
D. It is used by broker/dealers and investment advisers to terminate a representative’s registration in a particular jurisdiction or with a particular self-regulatory organization.
Juan is an investment adviser representative. He just resigned from ABC Investment Adviser Firm to take a job at XYZ Investment Adviser Firm. Which one of the following represents the filing responsibilities related to this job change?
A. ABC is required to file Form U5 within 30 days and XYZ is required to file Form U4.
B. XYZ is required to file Form U5 within 30 days and ABC is required to file Form U4.
C. Juan is required to file Form U5 within 30 days and Juan is required to file Form U4.
D. No filings are required because Juan is maintaining his current status of investment adviser representative with the new firm.
Page 3 of 4
All of the following items must be reported on Form U4, EXCEPT:
A. Outside business activity.
B. Employment history for the past 10 years.
D. Medical condition.
For filing erroneous U4 or U5 forms, FINRA’s Sanction Guidelines recommends as penalty a permanent bar of an individual:
A. In all cases.
B. When aggravating factors are present.
C. When aggravating factors are predominant.
D. If the individual intended to conceal information or mislead.
Under FINRA Rule 4513, written customer complaints must be preserved for a period of at least:
A. 1 year.
B. 2 years.
C. 4 years.
D. 6 years.
Which one of the following constitutes a reportable customer complaint?
A. A text received from an executor of a customer’s estate indicating the final handling of the decedent’s securities was improper.
B. A phone call received from a customer in which the customer said an order was not completed as requested.
C. A letter written by a customer’s friend who overheard a conversation in which the customer was critical of service received.
D. An in-person comment by a customer saying that investment advice received was misleading.
FINRA has two proceedings for handling customer complaints – formal and informal. If a customer decides to pursue informal proceedings, the complaint can be resolved according to FINRA’s:
A. Board of Governors.
B. Code of arbitration.
C. Code of procedure.
D. District Business Conduct Committee.
Which one of the following represents a type of complaint resolution that involves an independent third party who provides a nonbinding resolution to the matter?
B. Res ipsa loquitur.
Tara, a registered representative, received a customer complaint. Her first course of action should be to:
A. Do nothing until contacted by FINRA.
B. Try to handle the customer herself.
C. Notify the branch manager or designated compliance individual.
D. Notify the Chief Compliance Officer of the broker/dealer.
Ronnie, who lives in California, opens an account with a brokerage firm in Texas. This represents his only account with the firm. He receives an electronic transfer of large amounts of low-priced, non-exchange-listed securities and deposits the securities into the account. This action represents:
A. The churning of securities.
B. A potential red flag.
C. An open market operation.
D. Asset allocation.
Red flags are most easily monitored through the use of:
A. Validity checks.
B. Research reports.
C. Exception reports.
D. Complaint reports.
Which one of the following statements is correct regarding outside business activities?
A. Passive activities and private securities transactions are not considered outside business activities.
B. Registered representatives are not permitted to execute trades for people employed at other firms.
C. Registered representatives are required to disclose their involvement in all outside business activities.
D. Compensation must be received for an activity to count as an outside business activity.
Page 4 of 4
All of the following would be considered outside business activities, EXCEPT:
A. Serving on the board of directors of a company.
B. Working as an employee at another company.
C. Working as a sole proprietor in any capacity.
D. Investing personal assets in a blind trust.
Which one of the following does FINRA Rule 3270 (Outside Business Activities of Registered Person) require a member firm to consider before approving an outside business activity?
A. Will the activity take too much of the registered person’s time away from that person’s family?
B. Will the activity lead to the registered person engaging in additional outside activities?
C. Will the activity in any way interfere with the individual’s ability to serve the firm’s customers?
D. Will the activity lead to the registered person leaving the association with the member firm?
Caridad is an agent of a broker/dealer. Unbeknownst to the broker/dealer, she is selling interests in a limited partnership to existing clients of the broker/dealer. Caridad receives a commission on the sales of the limited partnership interests and on the sales of other securities in the clients’ accounts. Caridad is violating the Uniform Securities Act because she is engaging in:
B. Selling away.
D. Insider trading.
If a registered representative makes a contribution to an elected local or state government official or a candidate in excess of a de minimis amount:
A. The broker/dealer and all its registered representatives will be subject to a fine imposed by either the SEC or FINRA.
B. The broker/dealer and all its registered representatives are prohibited from receiving compensation from the applicable government entity for two years.
C. The broker/dealer will be required to complete a surprise audit.
D. The broker/dealer will be sanctioned by FINRA, and the registered representative making the contribution will be suspended for one year.
FINRA Rule 2030 (Engaging in Distribution and Solicitation Activities with Government Entities) would apply to:
B. A broker/dealer acting on behalf of an investment adviser registered with state securities authorities.
C. A broker/dealer engaged in activities that would require municipal adviser registration.
D. An investment adviser relying on another exemption from SEC registration.
A. A FINRA member that solicits a government entity on behalf of an affiliated investment adviser.
Under FINRA, what is generally the maximum value of gifts in a calendar year that can be given to a customer?
When must political contributions be reported to the Municipal Securities Rulemaking Board?
Some open-end investment companies provide reimbursement for travel and other expenses associated with attending conferences as inducement to sell their product. Which one of the following represents a requirement that must be satisfied for the investment companies to provide this incentive?
A. Reimbursement must be provided for recreational activities while at the meeting.
B. The investment company must reimburse the representative for a spouse’s travel costs if the spouse chooses to attend.
C. The reimbursement provided to the representative must be dependent upon a sales goal being reached.
D. The location of the meeting must be in line with the overall purpose of the meeting.
Which one of the following must be reported on Form U4?
A. Chapter 7 bankruptcy 12 years ago.
B. Limited partner in a partnership that went bankrupt last year.
C. Felony conviction for a DUI charge 13 years ago.
D. Misdemeanor charge for trespassing.
Bobby, a CFP® professional, CPA, and Registered Investment Advisor, manages $30,000,000 in assets in the state of Wyoming. His largest client, Tammy, sends a letter to him accusing him of breaching his fiduciary duty because Bobby purchased a social networking stock IPO in Tammy’s account. If Tammy chooses to escalate her complaint, which institution has ultimate authority over Bobby’s potential breach of fiduciary duty?
D. CFP Board.