Exam (elaborations)
CHAPTER 18 FINRA REGISTRATION QUESTIONS AND ANSWERS WITH SOLUTIONS 2025
- Course
- Institution
CHAPTER 18 FINRA REGISTRATION QUESTIONS AND ANSWERS WITH SOLUTIONS 2025
[Show more]
Content preview
CHAPTER 18 FINRA REGISTRATIONQUESTIONS AND ANSWERS WITH
SOLUTIONS 2025
Securities,regulation,in,the,United,States,include,both,federal,and,state,level,regulations.,The,Un
ited,States,Securities,and,Exchange,Commission,(SEC),holds,primary,resposibbility,for,enforcing,f
ederal,securities,law,and,for,regulating,the,securities,industry,,the,nation's,stock,and,options,exc
hanges,and,other,electronic,securities,markets.,Created,by,the,Securities,Exchange,Act,of,1934,,t
he,SEC,was,also,given,the,power,to,regulate,the,cmpanies,whose,securities,are,listen,on,exchang
es,and,various,OTC,venues.,
Quasi0governmental,organizations,,or,SROs,,also,have,authority,over,the,securities,industry.,The
,Financial,Industry,Regulatory,Authority,(FINRA),was,formed,by,the,merger,of,the,enforcement,d
ivisions,of,the,National,Association,of,Securities,Dealers,(NASD),and,the,New,York,Stock,Exchang
e,(NYSE).,Certain,regulatory,authority,is,delegated,by,the,SEC,to,FINRA,and,other,SROs.,Many,sta
tes,also,regulate,the,securitie,-,ANSWER,
What,is,FINRA?,-
,ANSWER,The,Financial,Industry,Regulatory,Authority,(FINRA),is,the,largest,independent,regulat
or,of,all,securities,firms,doing,business,in,the,United,States.,Its,chief,role,is,to,protect,investors,b
y,maintaining,fairness,in,the,U.S.,capitla,markets.,FINRA,and,other,SROs,,such,as,the,Municipal,S
ecurities,Rulemaking,Board,(MSRB),and,the,Chicago,Board,Options,Exchange,(CBOE),,are,accoun
table,to,the,SEC,for,enforcing,federal,securities,laws,and,supervising,their,members.,FINRA,is,inv
olved,in,realy,every,aspect,of,the,securities,business.,Its,role,include:,
-,registering,and,educating,industry,participants
-,writing,and,enforcing,rules,,while,enforcing,the,rules,of,the,SEC
-,Examining,firms,for,regulatory,compliance
-,Administering,dispute,resolution,forums,for,investors,and,member,firms
-
,Performing,market,regulation,for,various,exchanges,,including,the,Nasdaq,Stock,Market,and,the
,International,Securities,Exchange
,U.S.,broker-
dealers,that,are,engaged,in,investment,banking,and,general,securities,business,in,U.S.,markets,
must,generally,become,FINRA,members,and,are,subject,to,its,regulatory,oversight.
Registration,of,Broker,Dealers,-
,ANSWER,A,firm,that,wishes,to,participate,in,investment,banking,or,general,securities,business,a
s,a,broker-
dealer,must,register,with,the,SEC,and,become,a,FINRA,member.,To,initiate,the,process,,the,firm,
must,submit,to,FINRA,a,New,Member,Agreement,(NMA),,Form,BD,and,a,detailed,business,plan,,
and,pay,the,appropriate,fees.,Registration,with,the,SEC,is,complete,when,FINRA,approves,the,ne
w,member,agreement.,
FINRA's,New,Member,Agreement,memorializes,the,contractual,relationship,betweent,he,applic
ant,and,FINRA.,It,requires,certifications,that,the,applicant,will,comply,with,various,securities,reg
ulations,,as,well,as,maintain,high,standards,of,commercial,honor,and,just,and,equitable,principl
es,of,trade.,It,outlines,the,appliant's,perfmitted,and,prohinited,business,activities,,based,on,its,b
usiness,plan,and,supervisory,procedures.,The,applicant,may,begin,conducting,business,only,whe
n,the,New,Membership,Agreement,has,been,approved.,
If,a,decision,against,the,firm's,membership,has,been,made,,the,firm,may,file,a,written,request,fo
r,review,with,FINRA's,national,adjudicatory,council.,The,request,must,be,filed,within,25,days,aft
er,services,of,the,decision.,
For,purposes,of,FINRA,membership,admission,,the,broker-
dealer,and,its,principals,ar,eonly,required,to,be,registered,in,the,state,in,which,the,firm's,home,
office,is,located.,However,,under,state,law,,hte,broker-
dealer,,prinncipals,and,each,registered,representative,must,be,registered,in,every,state,in,which,
securities,business,will,be,conducted.
KN:,What,does,it,mean,for,a,broker-dealer,to,be,SEC,and,FINRA,registered?,-
,ANSWER,When,a,broker-dealer,is,registered,with,FINRA,and,the,SEC,,it,means,that,the,broker-
dealer,is,authorized,to,do,securities,business.,It,does,not,mean,that,FINRA,and,hte,SEC,are,endo
rsing,the,services,of,the,firm,or,confirming,the,ethical,nature,of,the,firm's,practices.
, SPIC,Registration,(Securities,Investor,Protection,Corporation),-
,ANSWER,SIPC,is,a,nonprofit,corporation,created,by,an,act,of,Congress,and,funded,by,member,a
ssessments,to,protect,the,clients,of,broker-
dealers,that,are,forced,into,bankruptcy.,In,the,event,of,a,firm's,bankruptcy,,SIPC,provides,broker
age,customers,up,to,$500K,coverage,ffor,cash,and,securities,held,by,the,firm,,although,coverage,
of,cash,is,limited,to,$250K
Exempted,from,the,SIPC,requirement,are,firms,that,exclusively,sell,mutual,fund,shares,,variable,
annuities,nad,insurance,and,government,securities,,as,well,as,those,that,furnish,investment,advi
ce,to,investment,or,insurance,companies.
Registration,of,Personnel,-
,ANSWER,After,a,firm's,membership,has,been,approved,by,FINRA,,the,firm,must,submit,form,U4
,,fingerprints,and,fees,for,each,associated,person,who,is,required,to,be,registered,under,FINRA,r
ules.,Registration,requirements,apply,to,any,person,associated,with,a,member,firm,who,is,engag
ed,in,the,securities,business,of,the,firm.,Note,that,individuals,may,registered,with,FINRA,only,if,e
mpoyed,and,sponsored,by,a,FINRA,member,firm.,The,failure,of,any,firm,to,register,an,employee,
could,subject,the,firm,to,disciplinary,action.,
Keep,in,mind,that,an,associated,person,is,one,whose,activities,are,controlled,directly,or,indirectl
y,by,a,member,firm,and,that,not,all,associated,persons,require,registartion.,Also,,only,duly,empl
oyed,personnel,of,a,firm,can,be,sponsored,for,registration.,Also,,only,duly,employed,personnel,o
f,a,firm,can,be,sponsored,for,registration.,It,would,be,a,violation,of,FINRA,regulations,to,sponsor
,someone,who,is,not,employed,by,the,firm,in,a,role,requireing,registration,This,is,referred,ot,as,
parking,a,registration.
The,U4,Form,-
,ANSWER,The,U4,,also,known,as,the,Uniform,Application,for,Security,Industry,Registration,or,Tra
nsfer,,collects,pertinent,background,informatio,about,candidates,for,registration,,and,is,used,as,
a,screening,tool,by,regulators,(e.g.,,FINRA,,the,states,and,exchanges),for,new,or,continued,regist
artion.,It,is,one,of,the,primary,sources,of,informait,for,a,registered,rep's,Centeral,Registration,De
pository,(CRD),record,with,FINRA.,It,contains,personal,information,about,each,broker,or,candida
te,such,as:,
-,Name,
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
