Series 14 cheat sheet

Rule 3110(a)-(b): a member must establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with securities laws, regulations, and FINRA rules.

Rule 3120: the CEO or a designee must sign and submit an annual report describing the member's supervisory control system, the testing of that system, and any amendments or corrective actions.

Rule 3130: the CEO must certify annually that the member has processes to establish, maintain, and enforce compliance policies, that the processes were reviewed within the prior 12 months, and that the Rule 3120 report is accurate.

Rule 3310 AML program elements: written internal controls, a designated AML compliance officer, ongoing training of personnel, and independent testing of the program (no less than annually).

Rule 2010: members and associated persons must observe high standards of commercial honor and just and equitable principles of trade; conduct may violate Rule 2010 even when no specific rule addresses it.

Rule 9600: requests for exemptive relief from FINRA rules are filed with FINRA; relief is limited to the applicant and conditioned on compliance with any stated terms.

Membership and registration: Rule 1010 governs the application for membership (Form NMA), Rule 1122 addresses statutory disqualification, and associated persons are registered through Form U4 filed with CRD.

Obligations apply concurrently: FINRA rules, Exchange Act and SEC rules, MSRB rules for municipal business, and applicable state requirements can each be violated by a single course of conduct.

Rule 3110(a): supervision must be conducted by a registered principal designated by the member to ensure compliance with applicable rules and with the firm's written supervisory procedures.

Rule 3110(c): each office of supervisory jurisdiction must be inspected at least annually; every other office and non-branch location must be inspected on a schedule of no less than every three years.

Rule 3110(b)(4): written procedures must address review of incoming and outgoing written and electronic correspondence and internal communications of associated persons.

Annual compliance meeting: each registered person must participate at least annually in an interview or meeting covering compliance matters, conducted by a registered principal.

Rule 3220: gifts or gratuities to employees of another member or financial institution in relation to that employer's business are limited to $100 per person per year; ordinary business entertainment is excluded.

Rule 3240: associated persons must give prior written notice of outside business activities, and certain compensation arrangements require the member's written approval.

Rule 3270: private securities transactions require prior written notice; the member must approve or reject in writing, and approved transactions are recorded on the firm's books and supervised.

Rule 3170: members with specified disciplinary history must tape-record oral business communications relating to sales and retain the recordings for three years.

Rule 2210(b)(1): a registered principal must approve retail communications before first use, and approval records must be preserved for three years.

Rule 2020: members and associated persons may not use any manipulative, deceptive, or other fraudulent device or contrivance in connection with the purchase or sale of securities.

Rule 2090: the member must use reasonable diligence to know and retain the essential facts about each customer, including the authority of any person acting on the account.

Rule 2111 suitability has three prongs: reasonable-basis, customer-specific, and quantitative; an institutional customer affirmatively exercising independent judgment is assessed differently.

Regulation Best Interest imposes four obligations on recommendations to retail customers: disclosure, care, conflict of interest, and compliance.

IM-2121 (five percent markup policy): markups are evaluated against factors such as market conditions, the security's price and type, the size of the transaction, and services rendered; 5% is a guideline, not a safe harbor.

Rule 2150: customer funds and securities may not be used for the firm's benefit, losses may not be guaranteed, and the extent of SIPC coverage may not be misrepresented.

Rule 11870: a transfer instruction must be validated within one business day of receipt, and the transfer of assets must be completed within three business days after validation.

Rule 2330: deferred variable annuity purchases and exchanges require principal review within seven business days after the signed application reaches the servicing office.

Rule 2210(d): communications must be fair and balanced and not misleading; testimonials must disclose compensation paid and may not imply results are typical.

Rule 4511: books and records must be created, kept current, and preserved in conformity with SEA Rules 17a-3 and 17a-4; retention is generally six years with the first two years easily accessible.

Rule 4513: a record of each written customer complaint must be kept for four years, including the complainant's identity, the date received, and the substance of the complaint.

Rule 4530(a): written notice must be given to FINRA within 30 calendar days after the member knows or should know of a reportable event; quarterly statistical reports are due within 30 days after quarter end.

Rule 3510: members with retail customer accounts must submit quarterly statistical and summary information, including customer complaint data, within 30 days after the end of each calendar quarter.

Form U5 must be filed with CRD within 30 days of an associated person's termination, and it must disclose the reason for termination; Form U4 amendments are also filed through CRD.

Regulation S-P: deliver an initial privacy notice at the start of the customer relationship and annually thereafter, honor opt-out rights before sharing nonpublic personal information with nonaffiliated third parties, and safeguard customer records.

Rule 8210: FINRA may require production of books and records and may take testimony; failing to produce, appearing falsely, or providing inaccurate information is a separate violation.

Rule 2210(b)(3): communications with the public and records of principal approval are retained for three years, the first two in an easily accessible place.

Rule 15c3-1: minimum net capital is $250,000 for a broker-dealer that carries customer accounts or holds customer funds or securities; firms that do neither are subject to a lower minimum dollar amount.

Ratio tests: under the standard method, aggregate indebtedness may not exceed 15 times net capital; under the alternative standard, net capital must be at least 2% of aggregate debit items.

Rule 15c3-3: the member must compute its customer reserve requirement and deposit cash or qualified securities in a special reserve bank account for the exclusive benefit of customers, and maintain possession or control of customer securities.

SEA Rule 17a-11: immediate telegraphic notice is required to the SEC and the examining authority when net capital falls below 120% of the minimum requirement, with notice to SIPC upon an actual deficiency.

Rule 4120(a): the member must promptly notify FINRA, with written notice within 24 hours, of events such as a net capital deficiency, a failure to make a required reserve deposit, or inability to meet obligations.

SEA Rule 17a-5: audited financial statements are filed within 60 days of fiscal year end; FOCUS Part II is filed monthly by firms that compute net capital, and Part I is filed quarterly.

Rule 4311: an introducing member must have a written carrying agreement with its clearing member that allocates responsibilities and is submitted to FINRA before the arrangement begins.

Regulation T and Rule 4210: initial margin of 50% on long purchases, maintenance margin of 25% on long positions, and margin calls must be satisfied within the time periods specified in the rules.