Chapter 10 - SROs Flashcards

Chapter 10 - SRO's Flashcards series 99operations professional (supervises back office of brokerage firm) The uniform termination notice for securities industry registrationNotice of termination must be filed with FINRA within 30 days of termination Form u6 series 79limited reps - investment banking have you ever been charged with a felony? U-4 disclosure marketing the closeplacing a buy order at the end of the day at a much higher price of the stock at a much higher price than it is Informed that registration will be terminated with U5 form.firms may not carry or park registration for an individual that is currently not activeperson would need to prequalify if out of the industry for longer than 2 years from terminated date.Reg. status of persons in the armed forces have you ever been charged with a misdemeanor specified in the above point?leaving/returning to the securities industry Backing AwayThe failure of a market maker to fulfill its obligation to buy or sell the minimum amount for a bona fide quote pre-approve in writing between two registered persons at the same firmpersonal relationship with customers outside the broker dealer relationshipbusiness relationship outside the broker dealer relationshipPre-approval is not required if the customer is an immediate family member Outside business activites Manipulative practiceswash sales, matching orders "painting the tape", misleading statements.uniform disciplinary action reporting formused by SRO's, regulators, and jurisdictions to report disciplinary actions against broker-dealers and associated persons Finger printing sell securities or mutual fundsconsidered to be employees of the broker-dealermust be licensed as RR and must be supervised by Sales assistants FINRAfinancial industry regulatory authoritynonprofit regulatory organization who's members includes all securities firms doing business in the U.SWhen a securities firm is part of FINRA, firm is referred to as a "member firm"Purpose is to standardize practices, enforce fair and equitable rules, and establish disciplinary body to enforce rules to protect investorsLargest SRO in securities industry inactive statusregistered persons who enlist or are called for active duty shall be placed on inactive status and do not have to re-register upon their returnthey are allowed to

receive commissions while on dutymay allow the person to set up another RR to take over and share commissions Reg. status of persons in the armed forces - Deferral written continuing education program covered registered personsat least annually member firms must evaluate

training needs to develop a training plan continuing commissions

registration dept.for most member firms this is handled by the firms registration departmentregistrationrequired of any person who makes solicited telephone calls - no exceptions Persons not required to be registered with FINRA unauthorized trades is unethical and prohibited even when trades prove to be profitable to the customers any "cash payments" must be disclosed in the prospectus FINRA's main ruleA member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of tradeapplies to any facet to a registered reps behavior publicily-available websitesRR's personal profile on

members firms websiteBlogs with static contentExceptions:

personal websites (not securities related) Sales literature including written retail communications with more targeted audience Series 24principle registration FINRA requires member firms to have access to Brokercheck on member firms website, and must be easy to get on it Regulatory inquiries at-least annually member firms must provide the following information to customersFINRA regulation, public disclosure, hotline phone numberFINRA regulations and website addressa statement as to the availability of the investor brochure Private securities transactions of an associated person SECHighest level of regulation for securities industryfederal regulator of securities industryMain purpose is to protect investors, maintain fair, orderly, and efficient markets, and facilitateAll securities exchanges, regulators (finra) and financial firms that conduct a security business and their employees are under jurisdiction of the SEC Permitted transactionstransactions that demonstrate they aren't linked to the customer block order Ex: newspapers, magazines, television, radio, billboardAdvertisements which require principle approval any written communication to institutional investors only.This does not include internal communicationsif a firm has a reason to believe communications will be distributed to retail investors, must treat it as retail communicationsPrinciple pre-approval is not required Retail communications Unregistered - perform clerical duties onlyMay not solicit sales for customers or prospectus under any circumstances registered sales assistant For written complaints, you need to keep and store in each office of supervisory jurisdictions a separate file of customer complaints and actions taken a complaint is a written statement of a customer not available to applicants except by order of the SEC1.felony/misdemeanorindividuals have been convicted in the last 10 years of a felony, etc2. standards not metindividuals do not meet the training and experience standards Revocation of registration