Series 14 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Rule 3120 annual report

Requires the CEO or a designee to submit a yearly report describing the member's supervisory control system, the testing of that system, and any corrective actions taken.

Rule 3130 CEO certification

Requires the CEO to certify annually that the member has processes to establish, maintain, and enforce compliance policies, that those processes were reviewed in the prior twelve months, and that the Rule 3120 report is accurate.

Rule 3310 AML program

Requires a written anti-money-laundering program with four minimum elements: internal controls, a designated AML compliance officer, ongoing training, and independent testing, plus customer identification procedures.

Rule 2010 ethical standard

Requires members and associated persons to observe high standards of commercial honor and just and equitable principles of trade; a violation may be found even absent a specific rule.

Rule 9600 exemptive relief

Establishes the procedure for requesting relief from a FINRA rule; relief applies only to the applicant and is conditioned on meeting any stated terms, which are separately enforceable.

Rule 3110(b) written procedures

Requires members to establish, maintain, and enforce written supervisory procedures reasonably designed to achieve compliance with securities laws, regulations, and FINRA rules, and to amend them when necessary.

OSJ annual inspection

Rule 3110(c) requires each office of supervisory jurisdiction to be inspected at least annually, and every other office and non-branch location at least once every three years.

Annual compliance meeting

Each registered person must participate at least annually in an interview or meeting covering compliance matters, conducted by a registered principal; it may be held in person or by other means.

Rule 3220 gift limit

Associated persons may not give gifts or gratuities exceeding $100 per person per year to employees of another member or financial institution in relation to the recipient employer's business.

Rule 3240 outside business activities

Requires prior written notice to the member before an associated person engages in an outside business activity, and written approval for certain compensation arrangements connected with that activity.

Rule 3270 private securities transactions

Requires prior written notice of a proposed private securities transaction; the member approves or rejects in writing, and approved transactions are recorded on its books and supervised as firm business.

Rule 3170 communication taping

Members with specified disciplinary history must establish special written procedures to tape-record oral business communications relating to sales and retain the recordings for three years.

Rule 2210 principal approval

Retail communications must be approved by a registered principal before first use, and certain communications must be filed with FINRA's Advertising Regulation Department within ten business days of first use.

Rule 2111 suitability

Requires a reasonable basis to believe a recommendation is suitable for the customer in light of the investment profile, which includes age, financial situation, tax status, objectives, experience, and liquidity needs.

Rule 2090 know your customer

Requires reasonable diligence to know and retain the essential facts about each customer and about the authority of any person acting on the customer's behalf, for effective account servicing.

Regulation Best Interest obligations

Four obligations apply to recommendations to retail customers: disclosure, care, conflict of interest, and compliance; the recommendation must be in the customer's best interest, not merely suitable.

Five percent markup policy

Guidance that markups and markdowns on principal trades should be fair, considering market conditions, the security's type and price, transaction size, services rendered, and disclosure to the customer.

Rule 2020 manipulative devices

Prohibits members and associated persons from using any manipulative, deceptive, or other fraudulent device or contrivance in connection with the purchase or sale of securities.

Rule 11870 account transfers

Requires a customer transfer instruction to be validated within one business day of receipt and completion of the transfer of assets within three business days after validation.

Rule 2150 improper use of funds

Prohibits using customer securities or funds for anything other than the customer's benefit, guaranteeing customers against loss, and misrepresenting the firm's financial condition or SIPC protection.

Rule 4511 books and records

Requires members to make and keep current books and records in conformity with SEA Rules 17a-3 and 17a-4, generally preserving them six years with the first two years easily accessible.

Rule 4513 complaint records

Requires a record of each written customer complaint to be kept for four years, showing the complainant's identity, the date received, and a description of the complaint.

Rule 4530 reporting events

Requires written notice to FINRA within 30 calendar days after learning of specified events, including certain legal actions, regulatory actions, and internal findings of rule violations.

Regulation S-P privacy notices

Requires an initial privacy notice when the customer relationship begins and annual notices after that, plus a clear opt-out before nonpublic personal information is shared with nonaffiliated third parties.

Rule 8210 information requests

Authorizes FINRA to require the production of books, records, and documents and to take testimony; failure to comply is itself a separate rule violation.

SEA Rule 17a-4 retention

Requires most broker-dealer books and records to be preserved for six years, with the first two years in an easily accessible place, and sets permissible storage formats including electronic records.

Rule 15c3-1 net capital rule

Requires a broker-dealer to maintain minimum net capital; the requirement is $250,000 for firms that carry customer accounts or hold customer funds and lower for firms that do neither.

Rule 15c3-3 customer protection

Requires a special reserve bank account for the exclusive benefit of customers, funded to cover customer-related credits, and requires the firm to maintain possession or control of customer securities.

Rule 4120 regulatory notification

Requires prompt notice to FINRA, with written notice within 24 hours, of events such as net capital falling below requirements or a failure to make a required special reserve deposit.

Early warning notification threshold

Under SEA Rule 17a-11, a member whose net capital falls below 120 percent of its minimum requirement must give immediate telegraphic notice to its examining authority and the SEC.

Rule 17a-5 annual audit

Requires annual audited financial statements filed within 60 days of fiscal year end, with FOCUS Part II filed monthly by firms computing net capital and Part I filed quarterly.

Rule 4311 carrying agreement

Requires a written agreement between an introducing member and a clearing member that allocates responsibilities and specifies services, submitted to FINRA before the arrangement begins.