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Series 10 study materials
Series 10 study resources

Series 10 practice questions

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Question 1Supervision and Regulation of Associated Persons

A member firm has just hired an individual to work as a registered representative. Within what period must the firm file the person's Form U4 with the Central Registration Depository?

  1. Within 60 days of the association
  2. Within 30 days of the association Correct answer.
  3. Within 5 business days of the association
  4. Within 90 days of the association

Explanation

FINRA requires a member to file a Uniform Application for Securities Industry Registration (Form U4) for a newly associated person no later than 30 days after the person begins the association. Filing earlier is permitted, but 30 days is the outer limit.

Question 2Supervision and Regulation of Associated Persons

A registered representative resigns from a member firm. Within what period must the firm file a Form U5 terminating the registration?

  1. Within 10 calendar days of termination
  2. Within 30 calendar days of termination Correct answer.
  3. Within 30 business days of termination
  4. Within 60 calendar days of termination

Explanation

A member must file a Uniform Termination Notice (Form U5) within 30 calendar days after the termination of a person's association with the firm. The deadline is measured in calendar days, not business days.

Question 3Supervision and Regulation of Associated Persons

A registered representative becomes subject to a statutory disqualification event that must be disclosed on Form U4. Within what period must the member firm amend the form?

  1. Within 30 days of learning of the event Correct answer.
  2. Within 90 days of the event
  3. Immediately upon a written request from FINRA
  4. Within five business days of the event

Explanation

Material changes to a Form U4, including events that create a statutory disqualification, must be reported by amendment within 30 days of the event. The obligation runs from the occurrence, not from a regulator's request.

Question 4Supervision and Regulation of Associated Persons

A firm has just registered a new sales assistant who will be transacting business in securities. When must the individual's fingerprints be submitted?

  1. At the first annual compliance meeting
  2. Within 5 business days of hire
  3. Within 30 days of association Correct answer.
  4. Before the person handles any customer funds

Explanation

Fingerprint cards for persons subject to the fingerprint requirement must be submitted to the designated processing agent within 30 days after the person becomes associated with the member. The requirement applies to clerical and other non-registered persons as well as to registered representatives.

Question 5Supervision and Regulation of Associated Persons

A person was convicted of a misdemeanor involving securities fraud. For how long after the conviction does that event continue to constitute a statutory disqualification?

  1. 5 years
  2. 3 years
  3. 10 years Correct answer.
  4. Permanently, with no time limit

Explanation

Statutory disqualification includes a conviction within the preceding 10 years of a felony or of a misdemeanor involving securities, financial services, dishonesty, or breach of trust. Once 10 years have elapsed from the conviction, that event no longer disqualifies the person.

Question 6Supervision and Regulation of Associated Persons

An individual is registered for the first time. When must the individual complete the Regulatory Element of continuing education?

  1. Within 30 days after the second anniversary of registration
  2. Within 120 days after the second anniversary of registration Correct answer.
  3. By December 31 of the year following registration
  4. Within 120 days after the first anniversary of registration

Explanation

A person registered for the first time must complete the Regulatory Element within 120 days after the second anniversary of initial registration, and every three years thereafter. The deadline is tied to the anniversary date, not to the calendar year-end.

Question 7Supervision and Regulation of Associated Persons

A registered representative fails to complete the Regulatory Element within the required period. What is the consequence?

  1. The firm may grant a 90-day extension
  2. Registration is suspended until completed Correct answer.
  3. A fine is assessed but the registration continues
  4. The representative may continue under heightened supervision

Explanation

If the Regulatory Element is not completed within the required period, the person's registration becomes inactive and the individual may not perform registered functions until the requirement is satisfied. Neither the firm nor the representative can waive the requirement.

Question 8Supervision and Regulation of Associated Persons

How often must a member firm administer the Firm Element of its continuing education program?

  1. Every two years
  2. Quarterly
  3. Annually Correct answer.
  4. Every three years

Explanation

The Firm Element must be administered at least annually to covered registered persons, based on an annual needs analysis of the firm's business. It supplements, but does not replace, the Regulatory Element.

Question 9Supervision and Regulation of Associated Persons

At a minimum, how often must a member firm inspect each of its branch offices under FINRA rules?

  1. At least annually
  2. At least every five years
  3. At least every two years
  4. At least every three years Correct answer.

Explanation

FINRA rules require each branch office to be inspected at least every three years, with more frequent inspections required for offices that supervise other locations or engage in certain activities. The three-year cycle is the general minimum.

Question 10Supervision and Regulation of Associated Persons

How frequently must an office of supervisory jurisdiction be inspected?

  1. Every three years
  2. Every five years
  3. At least annually Correct answer.
  4. Every two years

Explanation

An office of supervisory jurisdiction must be inspected at least annually because of the supervisory responsibilities conducted there. Other branch offices fall under the general three-year inspection cycle.

Question 11Supervision and Regulation of Associated Persons

A registered representative wants to serve as an unpaid officer of a local charitable corporation unrelated to securities. Under FINRA rules, the representative must:

  1. Disclose the activity only on the annual compliance questionnaire
  2. Notify the firm within 30 days after beginning the activity
  3. Obtain approval only if the activity involves securities
  4. Provide prior written notice to the firm Correct answer.

Explanation

Rule 3270 requires an associated person to provide prior written notice to the member before accepting an outside business activity or compensation for it. The firm then determines whether the activity must be approved or restricted.

Question 12Supervision and Regulation of Associated Persons

A representative wants to sell interests in a private limited partnership to several of her firm's customers and will receive selling compensation. Under FINRA rules, she must:

  1. Give the firm prior written notice of the proposed role Correct answer.
  2. Obtain approval only if the issuer is an existing customer
  3. Register the transaction with FINRA before the sale
  4. Notify the firm only after the offering closes

Explanation

Rule 3280 requires prior written notice to the member before participating in a private securities transaction, describing the proposed role and any compensation. If compensation is involved, the firm must also approve the transaction in writing and record it on its books.

Question 13Supervision and Regulation of Associated Persons

Absent an exception, a representative may borrow money from a customer only when:

  1. The loan amount is less than $1,000
  2. The customer is an existing client of at least five years
  3. Firm procedures allow it and it is pre-approved in writing Correct answer.
  4. The customer signs a promissory note acknowledging the loan

Explanation

Rule 3240 permits borrowing or lending arrangements with customers only if the firm's written procedures allow them and the arrangement is pre-approved in writing, and only where a specified exception applies, such as a family member or a financial institution. Documentation alone does not make the arrangement permissible.

Question 14Supervision and Regulation of Associated Persons

Without prior written consent from the recipient's employer, a representative may give a business-related gift worth no more than what amount per year to any one recipient?

  1. $100 Correct answer.
  2. $250
  3. $50
  4. $500

Explanation

Rule 3220 limits gifts or gratuities given to any person in relation to the recipient's employer's business to $100 per year per recipient, absent the employer's prior written consent. The limit is applied annually and per individual.

Question 15Supervision and Regulation of Associated Persons

Under MSRB pay-to-play rules, a municipal finance professional may contribute up to what amount per election to a candidate for whom the professional is entitled to vote without triggering the ban on negotiated business?

  1. $150
  2. $250 Correct answer.
  3. $500
  4. $100

Explanation

The MSRB de minimis exception allows contributions of up to $250 per election to a candidate for whom the contributor is entitled to vote, and up to $150 to a candidate for whom the contributor is not entitled to vote. Contributions above those amounts trigger a two-year ban on negotiated municipal business with the issuer.

Question 16Supervision and Regulation of Associated Persons

A firm receives a do-not-call request from a prospective customer. Within what maximum period must the firm honor it?

  1. Within 10 days
  2. Immediately upon receipt
  3. Within 30 days Correct answer.
  4. Within 15 days

Explanation

Telemarketing rules require a firm to honor a do-not-call request within a reasonable time and no later than 30 days from the date of the request. The firm must also maintain an internal do-not-call list.

Question 17Supervision and Regulation of Associated Persons

Under federal telemarketing rules, calls to a residential customer may be placed only between:

  1. 8:00 a.m. and 5:00 p.m. in the caller's time zone
  2. 8:00 a.m. and 9:00 p.m. local time at the customer Correct answer.
  3. 9:00 a.m. and 8:00 p.m. local time at the customer
  4. 9:00 a.m. and 9:00 p.m. in the firm's time zone

Explanation

Telephone solicitations to a residence may be made only between 8:00 a.m. and 9:00 p.m. local time at the location of the person being called. Using the firm's time zone instead of the customer's local time is a common violation.

Question 18Supervision and Regulation of Associated Persons

Under FINRA Rule 4530, a member must report specified events to FINRA in writing no later than:

  1. 10 days after the event
  2. 30 days after the event Correct answer.
  3. 60 days after the event
  4. 5 business days after the event

Explanation

Rule 4530 requires a member to report specified events, such as certain disciplinary actions, findings, and settlements, to FINRA in writing within 30 days of the event. Quarterly statistical reporting of customer complaints is a separate obligation.

Question 19Supervision and Regulation of Associated Persons

How long must a member firm preserve records of written customer complaints?

  1. Three years
  2. Four years Correct answer.
  3. Six years
  4. Two years

Explanation

Rule 4513 requires a member to record and preserve written customer complaints for at least four years. The complaint record must identify the customer, the date, the substance of the complaint, and the firm's resolution.

Question 20Supervision and Regulation of Associated Persons

A representative reasonably believes that an elderly customer is being financially exploited by a relative. The firm should:

  1. Report the matter only if the customer specifically requests it
  2. Place a temporary hold on disbursements and investigate Correct answer.
  3. Close the account and mail the proceeds to the customer
  4. Continue normal processing until a court order is received

Explanation

FINRA rules permit and encourage firms to place a temporary hold on disbursements from a senior customer's account when exploitation is reasonably believed, and to conduct an internal review and, where appropriate, notify authorities. A hold may remain in place while the matter is investigated.

Question 21Supervision and Regulation of Associated Persons

A member firm's anti-money-laundering compliance program must provide for independent testing of the program:

  1. Every three years
  2. Only when FINRA conducts an examination
  3. At least annually Correct answer.
  4. Every two years

Explanation

An AML compliance program must be independently tested at least annually by personnel who are not responsible for implementing the program. The program must also include written policies, a designated compliance person, and ongoing training.

Question 22Supervision and Regulation of Associated Persons

Which statement about FINRA's whistleblower protections is correct?

  1. Firms may not retaliate against a good-faith reporter Correct answer.
  2. Only registered principals are protected by the rule
  3. Reports must first go through the firm's compliance department
  4. Firms may require employees to waive whistleblower rights

Explanation

FINRA Rule 9220 prohibits a member from retaliating against an associated person who reports a potential violation in good faith to FINRA, the SEC, or other authorities. The protection extends to associated persons generally, not just registered personnel.

Question 23Supervision and Regulation of Associated Persons

Sales of municipal fund securities, such as interests in a 529 savings plan, are governed primarily by:

  1. SEC Rule 15c2-12 disclosure requirements
  2. MSRB rules together with FINRA supervisory rules Correct answer.
  3. Only state securities registration requirements
  4. No principal review requirement at the selling firm

Explanation

Interests in municipal fund securities are municipal securities regulated by the MSRB, and the broker-dealer selling them remains subject to FINRA supervision rules. Suitability, disclosure, and recordkeeping obligations apply even though the securities are not registered under the Securities Act.

Question 24Supervision and Regulation of Associated Persons

A member firm's written supervisory procedures must, at a minimum:

  1. Specify who is responsible for each supervisory task Correct answer.
  2. Be filed with FINRA before they take effect
  3. Be identical for every branch office of the firm
  4. Be reviewed by an outside compliance consultant annually

Explanation

Rule 3110 requires written supervisory procedures that describe the supervisory system in enough detail to show who performs each supervisory task, how it is performed, and the titles and locations of the responsible personnel. The procedures must be tailored to the firm's actual business.

Question 25Supervision and Regulation of Associated Persons

When a firm delegates supervisory responsibilities to a branch office manager, the delegation must be:

  1. In writing and accepted by the manager Correct answer.
  2. Made orally and confirmed at the next annual meeting
  3. Approved in advance by FINRA
  4. Reviewed by outside counsel each quarter

Explanation

Supervisory duties may be delegated only to an appropriately registered person and the delegation must be documented and acknowledged. Delegation does not relieve the firm or the designated principal of ultimate supervisory responsibility.

Question 26Supervision and Regulation of Associated Persons

Within how many days after a registered representative's association with a member firm terminates must the firm file a Form U5 with FINRA?

  1. 30 calendar days Correct answer.
  2. 45 calendar days
  3. 10 calendar days
  4. 15 calendar days

Explanation

FINRA requires a member firm to file a Uniform Termination Notice for Securities Industry Registration (Form U5) within 30 calendar days after the termination of a registered person's association with the firm. The deadline runs from the termination date, not from when the firm completes its internal review.

Question 27Supervision and Regulation of Associated Persons

A registered representative experiences a reportable event that requires an amendment to Form U4. Within what period must the firm amend the Form U4?

  1. 90 calendar days
  2. 30 calendar days Correct answer.
  3. 60 calendar days
  4. 10 calendar days

Explanation

Under FINRA rules, a member firm must amend a registered person's Form U4 within 30 calendar days after learning of a reportable event. The obligation applies to events that are required to be disclosed on the uniform registration form.

Question 28Supervision and Regulation of Associated Persons

At what minimum frequency must a member firm hold an annual compliance meeting with its registered personnel?

  1. Monthly
  2. Every two years
  3. At least annually Correct answer.
  4. Quarterly

Explanation

FINRA Rule 3110 requires a member firm to conduct an annual compliance meeting, or interview, with each registered person. The meeting must cover compliance matters relevant to the firm's business and the registered person's responsibilities.

Question 29Supervision and Regulation of Associated Persons

Which new employee of a member firm is subject to fingerprinting under SEC rules?

  1. A registered representative who never handles cash
  2. A research analyst who only writes reports
  3. An operations clerk with access to customer cash Correct answer.
  4. A receptionist with no access to customer records

Explanation

SEC fingerprinting rules apply to partners, directors, officers, and employees whose duties include handling securities or cash, or who have access to customer records or assets. The test is the person's access and duties, not simply whether the person is registered.

Question 30Supervision and Regulation of Associated Persons

Under FINRA Rule 3110, each member firm must designate one or more principals responsible for what?

  1. Maintaining the firm's supervisory system Correct answer.
  2. Approving every customer order before execution
  3. Auditing every branch office each year
  4. Setting the firm's marketing budget

Explanation

FINRA Rule 3110 requires each member firm to designate one or more principals to establish, maintain, and review the firm's supervisory system. The system must be reasonably designed to achieve compliance with applicable securities laws and FINRA rules.

Question 31Supervision and Regulation of Associated Persons

Under FINRA Rule 3130, who must certify the member firm's compliance processes annually?

  1. The chief compliance officer
  2. The chief executive officer Correct answer.
  3. The senior registered principal
  4. The board chair

Explanation

FINRA Rule 3130 requires the chief executive officer to certify annually that the firm has in place processes to establish, maintain, review, test, and modify its policies and procedures reasonably designed to achieve compliance. The certification is a CEO-level responsibility.

Question 32Supervision and Regulation of Associated Persons

A member firm is conducting a routine inspection of a branch office. Who may perform the inspection under FINRA Rule 3110?

  1. A person not directly responsible for supervising that branch Correct answer.
  2. The firm's outside legal counsel only
  3. Any registered representative assigned to the branch
  4. The branch office manager who supervises the office

Explanation

Branch office inspections generally must be conducted by a person who is not directly responsible for supervising the office being inspected. This independence helps ensure that the inspection provides meaningful oversight rather than self-review.

Question 33Supervision and Regulation of Associated Persons

A firm maintains a location used only for occasional customer meetings; it is not held out as an office and no securities records are kept there. How is it treated for inspection purposes?

  1. As a branch office requiring inspection every three years
  2. As a non-branch location not subject to branch inspection Correct answer.
  3. As a branch office requiring inspection every year
  4. As an office of supervisory jurisdiction

Explanation

A location that is not held out to the public as an office and is used only for occasional meetings generally is not a branch office for inspection purposes. It is often described as a non-branch location or office of convenience.

Question 34Supervision and Regulation of Associated Persons

A firm wants to associate with a person subject to statutory disqualification. What must the firm do before the person may associate with it?

  1. Wait five years from the disqualifying event
  2. Apply to FINRA for approval under the MC-400 process Correct answer.
  3. Obtain only the customer's written consent
  4. File a Form U5 for the person within 10 days

Explanation

A member firm may not associate with a statutorily disqualified person unless FINRA approves the association. The firm generally seeks approval through the MC-400 application process and must demonstrate appropriate supervision.

Question 35Supervision and Regulation of Associated Persons

Which termination from a member firm must be reported on Form U5 as 'for cause'?

  1. A termination after an internal review finds the representative violated firm policy Correct answer.
  2. A layoff due to a merger of two departments
  3. A voluntary resignation after 20 years of service
  4. A temporary medical leave

Explanation

A termination is reported as 'for cause' when it results from a violation of investment-related statutes, regulations, or firm policies, or from certain other misconduct. The key is the reason for the termination, not the length of service.

Question 36Supervision and Regulation of Associated Persons

Before a registered representative may share in the profits of a customer's account, FINRA Rule 3240 generally requires what?

  1. Only the customer's verbal consent
  2. Written customer consent and written firm approval Correct answer.
  3. Approval from the SEC
  4. Only verbal approval from the branch manager

Explanation

FINRA Rule 3240 generally requires written authorization from the customer and written approval from the member firm before a representative shares in a customer's account. The firm must also have procedures governing such arrangements.

Question 37Supervision and Regulation of Associated Persons

A representative tells a customer that the firm will reimburse any loss in a recommended stock. Under FINRA rules, this is:

  1. Permitted only for large accounts
  2. Permitted with principal approval
  3. Prohibited under FINRA rules Correct answer.
  4. Permitted for accredited investors

Explanation

FINRA rules prohibit guaranteeing a customer against loss in a securities account. Such a promise is misleading and undermines the customer's understanding of investment risk.

Question 38Supervision and Regulation of Associated Persons

What is required before a representative may exercise discretion in a customer's account?

  1. A signed margin agreement
  2. Written customer authorization accepted by the firm Correct answer.
  3. A verbal understanding confirmed after the first trade
  4. Only the representative's supervisor's verbal approval

Explanation

A representative may exercise discretion only after obtaining written authorization from the customer and having the firm accept the account as discretionary. The firm's supervisory procedures then govern how discretion is monitored.

Question 39Supervision and Regulation of Associated Persons

Under FINRA Rule 2165, a member firm that reasonably believes a senior customer is being financially exploited may place an initial temporary hold on disbursements for up to:

  1. 30 business days
  2. 15 business days Correct answer.
  3. 45 business days
  4. 5 business days

Explanation

FINRA Rule 2165 permits an initial temporary hold on disbursements for up to 15 business days when the firm reasonably believes financial exploitation has occurred or is being attempted. The firm may extend the hold for an additional 10 business days if the conditions of the rule are met.

Question 40Supervision and Regulation of Associated Persons

Under FINRA Rule 4512, a firm opening an account for a natural person must make reasonable efforts to obtain what?

  1. A power of attorney
  2. The customer's tax return
  3. The name of a trusted contact person Correct answer.
  4. A copy of the customer's will

Explanation

FINRA Rule 4512 requires member firms to make reasonable efforts to obtain the name and contact information of a trusted contact person for accounts held by natural persons. The trusted contact can help the firm address issues such as diminished capacity or potential exploitation.

Question 41Supervision and Regulation of Associated Persons

Under a customer identification program, when must a firm verify a new customer's identity?

  1. Before any order may be entered, without exception
  2. Only before the first wire transfer
  3. Only when the account exceeds $100,000
  4. Within a reasonable time after the account is opened Correct answer.

Explanation

A customer identification program must include procedures to verify a customer's identity within a reasonable time after the account is opened. If identity cannot be verified, the firm must follow its procedures for addressing the situation, which may include closing the account.

Question 42Supervision and Regulation of Associated Persons

After a firm files a suspicious activity report (SAR), may it notify the customer that the report was filed?

  1. Yes, if the branch manager approves
  2. No, SAR filing is confidential Correct answer.
  3. Yes, after 30 days
  4. Yes, if the customer requests it in writing

Explanation

SARs are confidential, and a firm may not disclose to the customer that a SAR has been filed. This confidentiality supports the effectiveness of the anti-money-laundering reporting system.

Question 43Supervision and Regulation of Associated Persons

A customer deposits $15,000 in cash into a brokerage account in one business day. What must the firm file?

  1. A Form 10-K
  2. A suspicious activity report
  3. A Form U5
  4. A currency transaction report Correct answer.

Explanation

A currency transaction report generally must be filed for cash transactions in excess of $10,000 in one business day. A $15,000 cash deposit exceeds that threshold.

Question 44Supervision and Regulation of Associated Persons

Which member firm must adopt special supervisory procedures, including taping of certain conversations, under FINRA Rule 3170?

  1. Only firms that sponsor variable annuities
  2. Every member firm with more than 100 registered representatives
  3. Firms with specified disciplinary history Correct answer.
  4. Only firms with a bank affiliate

Explanation

FINRA Rule 3170 requires member firms with specified disciplinary history to adopt special supervisory procedures, which may include taping of conversations with customers. The rule targets firms with particular regulatory concerns rather than all firms or firms in a particular product line.

Question 45Supervision and Regulation of Associated Persons

Before a member firm uses a new retail communication that promotes a security, who must approve it?

  1. A registered principal of the firm Correct answer.
  2. The registered representative who created it
  3. Any registered representative in the branch
  4. The customer receiving it

Explanation

FINRA rules require a registered principal to approve retail communications before they are used, unless a specific exception applies. Principal review is part of the firm's supervisory system for communications with the public.

Question 46Supervision and Regulation of Associated Persons

A firm's written supervisory procedures must provide for review of which of the following?

  1. Only advertisements placed in newspapers
  2. Correspondence with the public Correct answer.
  3. Only emails sent by officers
  4. Only incoming mail to the compliance department

Explanation

FINRA Rule 3110 requires supervisory procedures to include review of correspondence and internal communications relating to the firm's securities business. The review is intended to detect and address problems in communications with customers and the public.

Question 47Supervision and Regulation of Associated Persons

Which person is an 'associated person' of a member firm under FINRA rules?

  1. A vendor that supplies office equipment
  2. An employee who controls the firm's securities business Correct answer.
  3. A person who only reads the firm's website
  4. A customer who places orders through the firm

Explanation

An associated person generally includes a firm's registered representatives, officers, and employees who control or are involved in the firm's securities business. Customers, vendors, and mere website visitors are not associated persons.

Question 48Supervision and Regulation of Associated Persons

A representative wants to remove a customer dispute from the central records system. What must the representative generally obtain?

  1. A letter from the customer's attorney
  2. A new Form U4
  3. Approval from the firm's compliance officer only
  4. A court order or an arbitration award directing expungement Correct answer.

Explanation

Expungement of customer dispute information from the central records system generally requires a court order or an arbitration award directing expungement. The process is intended to prevent improper removal of accurate customer complaint information.

Question 49Supervision and Regulation of Associated Persons

Under FINRA Rule 4370, how often must a member firm review its business continuity plan?

  1. At least annually Correct answer.
  2. Every month
  3. Every quarter
  4. Every five years

Explanation

FINRA Rule 4370 requires a member firm to review its business continuity plan at least annually. The review helps ensure that the plan remains reasonably designed for the firm's current business and operations.

Question 50Supervision and Regulation of Associated Persons

Which event must a representative disclose on Form U4 as a statutory disqualification?

  1. A civil lawsuit over a contract
  2. A felony conviction within the past 10 years Correct answer.
  3. A speeding ticket from 15 years ago
  4. A high school suspension

Explanation

Statutory disqualification includes certain criminal convictions, such as a felony conviction within the past 10 years. Minor traffic violations, ordinary civil lawsuits, and school disciplinary actions generally do not meet the definition.