Series 10 key terms

An individual registered with FINRA through a member firm to solicit and handle securities business with the public, whose activities the firm is required to supervise.

A person registered with FINRA who is qualified to supervise a member firm's securities business, including managing offices, approving accounts, and reviewing transactions and communications.

The uniform application used to register an individual with FINRA and state regulators, recording employment history, qualifications, and disciplinary disclosures that must be kept current.

The uniform termination notice a firm files with FINRA when a registered person leaves, stating the reason for termination and the circumstances of the separation.

A condition such as certain criminal convictions, regulatory bars, or court injunctions that makes a person or firm ineligible for registration or membership unless relief is granted.

Ongoing training required of registered persons, made up of a Regulatory Element mandated by FINRA and a Firm Element based on the firm's own needs assessment.

Any business activity, paid or unpaid, that a registered person conducts outside the member firm and that generally must be disclosed to and approved by the firm in advance.

A transaction in securities outside the scope of a registered person's employment with the firm, often called selling away, which must be disclosed and is usually subject to firm approval and supervision.

FINRA limits on gifts given in relation to another person's business; generally anything above a stated annual dollar amount per recipient requires firm permission and recordkeeping.

Rules barring a member firm from engaging in certain investment banking business for government entities after the firm or its covered persons make political contributions to officials who can influence awarding that business.

The obligation to use reasonable diligence to know each customer, including the customer's authority to act, and to keep that information current throughout the relationship.

The SEC standard requiring a broker-dealer to act in a retail customer's best interest when recommending securities, without putting its own interests ahead of the customer's.

An account for which the customer has given the firm written authority to buy and sell without contacting the customer before each order; such accounts receive heightened supervision.

A written power of attorney letting someone other than the account owner enter orders or withdraw assets; the firm must review and approve it and monitor the resulting activity.

An account held by two or more owners, often with rights of survivorship, in which the firm should document each owner's authority and the customer's instructions on trading and disbursements.

A custodial account opened for a minor under a state transfers-to-minors statute, in which the gift becomes irrevocable and the minor owns the assets.

The Federal Reserve rule governing credit extended by brokers, setting initial margin requirements and payment deadlines for securities purchases in margin accounts.

A customer who executes four or more day trades in five business days in a margin account, where those trades make up a meaningful share of the account's activity; special margin rules apply.

The industry system used to move customer accounts between firms, with rules governing validation, transfer of assets, and deadlines for completing or rejecting a transfer request.

SEC rules requiring broker-dealers to safeguard customer nonpublic personal information and to provide privacy notices and opt-out rights where applicable.

A firm's documented system describing how it supervises its business, including who reviews what, how often reviews occur, and how exceptions are escalated and handled.

A firm location where certain supervisory functions are conducted, such as approving new accounts or reviewing transactions, and which is subject to more frequent inspection.

A periodic on-site review of a firm location's records, procedures, and activities, with the required frequency depending on whether the office is supervisory or non-supervisory.

A yearly meeting at which the firm reviews compliance matters, supervisory responsibilities, and regulatory developments with registered personnel, as required by FINRA rules.

Written or electronic messages between the firm and its customers, or internal messages about the firm's business, that must be reviewed and supervised under firm procedures.

A written or electronic communication distributed to more than 25 retail investors within 30 calendar days; it must be approved by a qualified registered principal before first use and retained as a record.

Any written grievance from a customer alleging a problem with the firm's services or personnel; it must be logged, reviewed, and in some cases reported to regulators.

A firm's written policies, procedures, and internal controls, including a designated compliance officer and ongoing training, designed to detect and report money laundering.

A confidential filing made to FinCEN when a firm detects transactions that may involve money laundering or other illegal activity; the customer is not told about the filing.

Procedures required of broker-dealers to verify each customer's identity, keep records of the verification, and check names against government lists before opening an account.

The duty to seek the most favorable terms reasonably available for customer orders under current market conditions, considering price, speed, likelihood of execution, and other factors.

The amount a dealer adds to or subtracts from a security's market price when trading as principal with a customer; the charge must be fair and reasonable.

Excessive trading in a customer account that is directed by the representative to generate commissions rather than to serve the customer's investment objectives.

The records a firm must make and keep, such as blotters, ledgers, order tickets, and communications, for specified retention periods under SEC and FINRA rules.

An SEC rule requiring a broker-dealer to maintain a minimum amount of liquid capital in relation to its liabilities so it can meet obligations and protect customers.

An SEC rule requiring firms to keep customer securities and free credit balances segregated, backed by a reserve account, rather than using them to finance the firm's business.

A national system to which firms report every order and execution in U.S. securities, letting regulators reconstruct market activity across trading venues.

A firm's written plan for continuing operations and protecting records during significant disruptions, including procedures for customer access to funds and prompt notification.

Insurance covering losses from employee dishonesty, such as theft or forgery, which a member firm must carry in at least the minimum amount required by FINRA rules.