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Series 24 study materials
Series 24 study resources

Series 24 practice questions

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Question 1Supervision of Registration of Broker-Dealer and Personnel Management Activities

A newly formed broker-dealer intends to conduct a securities business with the public and must register with the SEC. Which form does the firm file to become registered as a broker-dealer?

  1. Form U5
  2. Form U4
  3. Form ADV
  4. Form BD Correct answer.

Explanation

A broker-dealer registers with the SEC by filing Form BD, the uniform application for broker-dealer registration. Form ADV is the investment adviser registration form, while Forms U4 and U5 are used to register and terminate individual associated persons.

Question 2Supervision of Registration of Broker-Dealer and Personnel Management Activities

An associated person's Form U4 must be amended to reflect a material change in information. Absent a different specified deadline, within how many days of the event must the amendment be filed?

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

Explanation

Form U4 amendments for a material change must generally be filed within 30 days of the event that requires the amendment. Certain events, such as those involving statutory disqualification, carry a shorter 10-day deadline.

Question 3Supervision of Registration of Broker-Dealer and Personnel Management Activities

Under FINRA rules, a newly associated person who is subject to fingerprinting must be fingerprinted within how many days of the person's first day of association?

  1. 60 days
  2. 30 days
  3. 120 days Correct answer.
  4. 180 days

Explanation

Associated persons subject to fingerprinting must be fingerprinted within 120 days of their first day of association with the member firm. The firm must also submit the fingerprints to the FBI for processing.

Question 4Supervision of Registration of Broker-Dealer and Personnel Management Activities

A registered representative becomes subject to a statutory disqualification. Before the member firm may continue to associate with that person, what is required?

  1. FINRA must grant approval in an eligibility proceeding Correct answer.
  2. The member firm must terminate the person's association within 30 days
  3. No action, because the person's existing registration remains in effect
  4. The person must pass a new qualification examination before continuing

Explanation

A person subject to statutory disqualification may associate with a member firm only if FINRA grants approval, typically through an eligibility proceeding. The firm must file the request and may not simply rely on the person's existing registration.

Question 5Supervision of Registration of Broker-Dealer and Personnel Management Activities

When a registered representative leaves a member firm, the firm must file Form U5 with FINRA within how many days of the termination?

  1. 10 days
  2. 60 days
  3. 30 days Correct answer.
  4. 45 days

Explanation

Form U5 must be filed within 30 days of the termination of a registered person's association with the member firm. The firm must also provide the former representative with a copy of the filing.

Question 6Supervision of Registration of Broker-Dealer and Personnel Management Activities

The Regulatory Element of continuing education must be completed by a registered person within how many days of each anniversary of the person's initial registration?

  1. 30 days
  2. 365 days
  3. 120 days Correct answer.
  4. 180 days

Explanation

The Regulatory Element consists of computer-based training that must be completed within 120 days of each anniversary of the representative's initial registration. Failure to complete it within that window renders the person's registration inactive.

Question 7Supervision of Registration of Broker-Dealer and Personnel Management Activities

Under FINRA Rule 3110, how often must each office of supervisory jurisdiction be inspected?

  1. Quarterly
  2. Monthly
  3. At least every three years
  4. At least annually Correct answer.

Explanation

FINRA Rule 3110 requires each member firm to inspect every office of supervisory jurisdiction at least annually, using written inspection procedures. More frequent risk-based reviews are permitted but the annual review is the minimum.

Question 8Supervision of Registration of Broker-Dealer and Personnel Management Activities

A registered representative wants to serve as a paid outside director of a non-securities company. Under FINRA rules, what must the representative do?

  1. Resign from the member firm before accepting the position
  2. Nothing, because the activity is outside the securities business
  3. Obtain the firm's written approval only if the company is publicly traded
  4. Provide the member firm with prior written notice of the activity Correct answer.

Explanation

FINRA Rule 3270 requires prior written notice to the member firm before an associated person may accept an outside business activity or compensation for one. The firm then evaluates the activity and may approve it, impose conditions, or prohibit it.

Question 9Supervision of Registration of Broker-Dealer and Personnel Management Activities

A representative wishes to sell interests in a private offering to firm customers and receive selling compensation. Under FINRA Rule 3280, the representative must first:

  1. Give the firm written notice of the transaction Correct answer.
  2. Obtain the customer's written consent to the compensation
  3. Disclose the compensation in the offering documents
  4. Register the private offering with FINRA

Explanation

FINRA Rule 3280 requires an associated person to give the member firm written notice before participating in a private securities transaction. Where the person receives compensation, the firm must approve the transaction in writing and supervise it as though it were the firm's own business.

Question 10Supervision of Registration of Broker-Dealer and Personnel Management Activities

Which of the following locations would be required to register as a branch office under FINRA rules?

  1. An office where three registered representatives regularly conduct business with the public Correct answer.
  2. A hotel conference room used for a single client seminar
  3. A representative's residence where the representative works alone, is not held out to the public, and does not meet customers
  4. A temporary location used for fewer than 30 days

Explanation

A branch office generally includes any location other than the office of supervisory jurisdiction where associated persons regularly conduct the member's business with the public, or where records of that business are kept. A location used only occasionally or on a short-term basis is not a branch office requiring registration.

Question 11Supervision of Registration of Broker-Dealer and Personnel Management Activities

A registered representative is charged with a felony. Within how many days must the member firm amend the representative's Form U4 to disclose the charge?

  1. 5 calendar days
  2. 15 calendar days
  3. 10 calendar days Correct answer.
  4. 30 calendar days

Explanation

Most Form U4 amendments are due within 30 days, but events that constitute a statutory disqualification, such as a felony charge, must be reported within 10 days. Timely disclosure of these events is a core supervisory obligation of the firm.

Question 12Supervision of Registration of Broker-Dealer and Personnel Management Activities

A broker-dealer files its registration application with the SEC. Absent acceleration by the SEC, when does the registration become effective?

  1. 30 days after filing Correct answer.
  2. 45 days after filing
  3. Immediately upon filing
  4. 15 days after filing

Explanation

Under Section 15 of the Securities Exchange Act, a broker-dealer's registration becomes effective 30 days after the SEC receives the application. The SEC may accelerate the effective date upon a showing of good cause.

Question 13Supervision of General Broker-Dealer Activities

Which statement best describes a broker-dealer's obligation regarding written supervisory procedures under FINRA Rule 3110?

  1. Written supervisory procedures are required only for institutional sales and trading activities.
  2. Written supervisory procedures are required only for firms that maintain branch offices.
  3. The firm must establish, maintain, and enforce written supervisory procedures reasonably designed to achieve compliance with applicable rules. Correct answer.
  4. The firm may use oral procedures if it has fewer than ten registered representatives.

Explanation

FINRA Rule 3110(b) requires a member to establish, maintain, and enforce written supervisory procedures reasonably designed to achieve compliance with applicable securities laws, regulations, and FINRA rules, and to amend them as business changes require. A designated supervisor must also review those procedures at least annually.

Question 14Supervision of General Broker-Dealer Activities

Under FINRA Rule 3110, which location must be designated as an Office of Supervisory Jurisdiction?

  1. An office where the firm grants final approval of new customer accounts. Correct answer.
  2. An office used solely to store duplicate books and records off-site.
  3. An office where a single representative works alone and accepts only unsolicited orders.
  4. An office staffed only by clerical personnel who open mail.

Explanation

Rule 3110(a)(4) requires a member to designate as an Office of Supervisory Jurisdiction each location where one or more enumerated supervisory functions occurs, including final approval of new accounts, order execution or market making, structuring investment banking transactions, custody of customer assets, and final approval of advertising.

Question 15Supervision of General Broker-Dealer Activities

How often must a member firm hold the compliance meeting required by FINRA Rule 3110(a)(7)?

  1. At least once each year, with each registered representative meeting with a registered principal to discuss compliance matters. Correct answer.
  2. Every three years, in conjunction with the Regulatory Element.
  3. Only in the year a representative first registers with the firm.
  4. Only when FINRA requests that the firm conduct one.

Explanation

Rule 3110(a)(7) requires each member to have a process under which every registered representative attends, at least annually, a meeting with the firm's registered principals to discuss compliance matters. The meeting is separate from the continuing education requirements.

Question 16Supervision of General Broker-Dealer Activities

A firm maintains one Office of Supervisory Jurisdiction and twelve other branch offices. Under FINRA Rule 3110(c), what is the minimum inspection schedule?

  1. Every location must be inspected annually, including all twelve branch offices.
  2. Inspections are required only after a written customer complaint is received at a location.
  3. The Office of Supervisory Jurisdiction annually and the other branch offices at least every three years. Correct answer.
  4. The Office of Supervisory Jurisdiction every three years and the branch offices annually.

Explanation

Rule 3110(c) requires a member to inspect each Office of Supervisory Jurisdiction at least annually and each other branch office at least every three years, with the inspection covering the specific areas the rule identifies, such as safeguarding of customer assets and complaint handling.

Question 17Supervision of General Broker-Dealer Activities

Which statement correctly describes a registered representative's continuing education obligations?

  1. Both the Regulatory Element and the Firm Element must be completed annually.
  2. The Regulatory Element is designed and delivered by the employing member firm.
  3. The Firm Element is administered by FINRA and must be completed every three years.
  4. The Regulatory Element must be completed within 120 days of the second registration anniversary and every three years after that. Correct answer.

Explanation

The Regulatory Element is a FINRA-administered computer-based program required within 120 days of the second anniversary of initial registration and every three years thereafter. The Firm Element is developed and delivered by the member firm, based on its annual needs analysis.

Question 18Supervision of General Broker-Dealer Activities

A registered representative resigns from a member firm. When must the firm file the Uniform Termination Notice for Securities Industry Registration (Form U5)?

  1. Only after the representative requests that the form be filed.
  2. Within 90 days, together with the representative's final Form U4 amendment.
  3. Within 30 days of the termination of the representative's association with the firm. Correct answer.
  4. Within five business days of the resignation.

Explanation

FINRA requires a member to file a Form U5 within 30 days after the termination of a registered person's association with the firm, and to update the form if subsequently learned facts make an amendment necessary.

Question 19Supervision of General Broker-Dealer Activities

Which individual would be subject to statutory disqualification, preventing employment by a member firm without FINRA relief?

  1. A representative who settled a customer arbitration alleging unauthorized trading four years ago.
  2. A representative who was convicted of felony fraud eight years ago. Correct answer.
  3. A representative who received a personal bankruptcy discharge five years ago.
  4. A representative who received a 15-day suspension from FINRA twelve years ago for excessive trading.

Explanation

Statutory disqualification includes a felony conviction, or a misdemeanor involving securities, money laundering, or similar financial crimes, within the preceding ten years, along with injunctions, certain regulatory orders, and bars. A member may employ a disqualified person only after obtaining relief through FINRA's eligibility proceedings.

Question 20Supervision of General Broker-Dealer Activities

How often must a member firm conduct independent testing of its anti-money laundering program?

  1. Only when the firm opens a new branch office.
  2. Only when FINRA examiners request the test results.
  3. Quarterly, by the firm's AML compliance officer.
  4. At least annually, by persons independent of the AML compliance function. Correct answer.

Explanation

The Bank Secrecy Act and FINRA Rule 3310 require a member's AML program to include independent testing for compliance, conducted at least annually by personnel who are independent of the AML compliance function.

Question 21Supervision of General Broker-Dealer Activities

A firm's surveillance system identifies a $7,000 wire transfer that appears structured to evade reporting requirements. What is the firm's filing obligation?

  1. File a Suspicious Activity Report within 90 days, and only if the amount exceeds $10,000.
  2. File a Suspicious Activity Report within five business days in every case.
  3. File a Suspicious Activity Report within 30 calendar days of detecting the activity, and no later than 60 days if no suspect is identified. Correct answer.
  4. Take no action until FINRA instructs the firm to file a report.

Explanation

For broker-dealers, a Suspicious Activity Report must be filed with FinCEN within 30 calendar days after initial detection of facts that may constitute a basis for filing, and the period may be extended to 60 calendar days when no suspect is identified. The threshold for broker-dealer SARs is $5,000.

Question 22Supervision of General Broker-Dealer Activities

Under FINRA Rule 4513, how long must a member retain records of written customer complaints?

  1. Two years.
  2. One year.
  3. Four years. Correct answer.
  4. Six years.

Explanation

Rule 4513 requires a member to create and preserve a record of each written customer complaint for four years. Certain complaints must also be reported to FINRA under Rule 4530.

Question 23Supervision of General Broker-Dealer Activities

A firm wants to post a new retail communication describing a mutual fund's performance on its public website. Under FINRA Rule 2210, what must occur before first use?

  1. FINRA's Advertising Regulation Department must approve the content in advance.
  2. A registered principal must approve the communication before it is first used. Correct answer.
  3. Nothing, as long as the communication is limited to fewer than 25 retail investors.
  4. Any registered representative may approve it if the firm keeps a copy for three years.

Explanation

Rule 2210(b)(1) requires that a registered principal approve retail communications before first use, with limited exceptions for certain filed materials. Approval by a non-principal does not satisfy the rule.

Question 24Supervision of General Broker-Dealer Activities

Which statement accurately describes a firm's supervision of correspondence under FINRA Rule 3110?

  1. Correspondence must be reviewed under the firm's procedures and records retained for three years. Correct answer.
  2. Correspondence with existing retail customers is exempt from review.
  3. Supervision of correspondence is limited to letters sent by regular mail.
  4. A firm may never review a representative's personal email account under any circumstance.

Explanation

Rule 3110(b)(4) requires written procedures for reviewing correspondence and internal communications, and Rule 4511 requires the resulting records to be preserved for three years, with the first two years readily accessible. Electronic messages are covered to the same extent as paper correspondence.

Question 25Supervision of General Broker-Dealer Activities

Absent the member firm's prior written consent, what is the annual limit on gifts of value given by an associated person to an employee of a customer in connection with the firm's business?

  1. $100 per person per year. Correct answer.
  2. There is no dollar limit if the gift is disclosed to the recipient's employer.
  3. $250 per person per year.
  4. $500 per person per year.

Explanation

FINRA Rule 3220 caps gifts of value, including gratuities, at $100 per person per year when given in relation to the business of the recipient's employer, unless the member gives prior written consent after recording the arrangement.

Question 26Supervision of General Broker-Dealer Activities

A registered representative wants to serve as a paid officer of a small software company that is not a broker-dealer. What does FINRA Rule 3270 require?

  1. No notice is required for activities that involve no securities business.
  2. The representative must notify the firm in writing within 30 days after starting the activity.
  3. Nothing, unless the company issues securities to the public.
  4. The representative must provide the member firm prior written notice of the outside business activity. Correct answer.

Explanation

Rule 3270 prohibits an associated person from being an employee of, or receiving compensation from, another person for an outside business activity unless the person has provided prior written notice to the member. The firm then determines whether the activity is permissible and whether it must be supervised.

Question 27Supervision of General Broker-Dealer Activities

A representative wants to sell limited partnership interests in a private offering that is not offered through her member firm and will receive a commission from the issuer. What does FINRA Rule 3280 require?

  1. The representative must give prior written notice, and an approving firm must record and supervise the transaction. Correct answer.
  2. Private securities transactions of this kind are prohibited in all circumstances.
  3. The member firm must purchase the securities for its own account before the representative may sell them.
  4. Nothing, if the representative receives no compensation for the sales.

Explanation

Rule 3280 requires an associated person to give prior written notice describing the proposed transaction, her role, and any compensation. If the firm approves, it must record the transaction on its books and supervise the representative's participation as though it were the firm's own business.

Question 28Supervision of General Broker-Dealer Activities

Under FINRA Rule 3240, when may a registered representative borrow money from a customer?

  1. Whenever the loan is documented by a signed promissory note at a market rate.
  2. Whenever the representative discloses the loan to the customer in writing.
  3. Only if the firm's procedures allow it, the firm pre-approves in writing, and the customer fits a permitted category. Correct answer.
  4. Never, under any circumstances.

Explanation

Rule 3240 permits borrowing or lending arrangements with customers only where the member's written procedures allow them, the member pre-approves the arrangement in writing, and the customer falls into one of the rule's categories, such as an immediate family member or a financial institution.

Question 29Supervision of General Broker-Dealer Activities

A representative recommends a high-yield bond fund to a 78-year-old customer whose stated objective is capital preservation. Which statement describes the suitability standard that applies?

  1. The recommendation is suitable if the customer signs a risk acknowledgment at account opening.
  2. The recommendation is suitable if it would be appropriate for at least one other customer of the firm.
  3. The recommendation must be suitable based on the customer's investment profile. Correct answer.
  4. The recommendation is suitable once a registered principal approves the order ticket.

Explanation

FINRA Rule 2111 requires that a recommendation be suitable for the particular customer based on the customer's investment profile, which includes age, financial situation and needs, tax status, investment objectives, and risk tolerance. Principal approval does not substitute for the substantive suitability determination.

Question 30Supervision of General Broker-Dealer Activities

A new customer completes a new account application. Which action satisfies FINRA Rule 4512 for account approval?

  1. FINRA approves the account after reviewing the application.
  2. The representative who opened the account approves it as agent for the customer.
  3. The account is approved orally and memorialized in the firm's records within 30 days.
  4. A registered principal approves the account. Correct answer.

Explanation

Rule 4512 requires that the essential facts of each customer account be recorded and that the account be approved by a registered principal. The approval is a supervisory control intended to ensure that customer information and account features are properly documented.

Question 31Supervision of General Broker-Dealer Activities

Under FINRA Rule 4511, what is the general retention period for books and records that the rule requires a member to preserve?

  1. Six years, with the first two years readily accessible. Correct answer.
  2. Four years, all of it stored off-site.
  3. Three years, all of it readily accessible.
  4. Ten years for every record the firm creates.

Explanation

Rule 4511 requires books and records to be preserved for six years, with the first two years readily accessible to FINRA staff. Specific rule provisions, such as those for complaint records, may impose different periods.

Question 32Supervision of General Broker-Dealer Activities

Which statement describes the report on supervisory control systems required by FINRA Rule 3130?

  1. It is filed with the SEC and only when net capital falls below the minimum.
  2. It must be certified by the firm's outside securities counsel.
  3. The chief executive officer must certify annually, and the report must be submitted to FINRA. Correct answer.
  4. Only firms with more than 500 registered representatives must submit it.

Explanation

Rule 3130 requires the chief executive officer to certify annually, by December 31 or the firm's fiscal year end, that the member has processes in place to establish, maintain, enforce, and modify policies reasonably designed to achieve compliance, and requires a report describing those processes to be submitted to FINRA.

Question 33Supervision of General Broker-Dealer Activities

A customer gives a representative oral authority to buy and sell without prior approval of each order. What must occur before the firm may exercise discretion?

  1. A registered principal must approve the account in writing, following written customer authorization. Correct answer.
  2. FINRA must approve the discretionary account before the first discretionary trade.
  3. Oral authorization is sufficient if the representative confirms it in writing within 30 days.
  4. The representative need only document the investment rationale on each order ticket.

Explanation

FINRA Rule 3260 prohibits exercising discretion in a customer account absent prior written authorization from the customer and written acceptance of the account by a registered principal. Discretionary accounts are also subject to more frequent supervisory review.

Question 34Supervision of General Broker-Dealer Activities

An elderly customer asks to wire $60,000 to an individual the representative believes may be exploiting her. What do the trusted contact and temporary hold provisions permit the firm to do?

  1. Complete the wire immediately because customer instructions cannot be delayed.
  2. Require the trusted contact person to approve every trade in the account going forward.
  3. Rely on the representative's own judgment without any documented escalation.
  4. Try to obtain trusted contact information and place a temporary hold on the disbursement while investigating. Correct answer.

Explanation

FINRA Rule 4512 requires reasonable efforts to obtain the name and contact information of a trusted contact person for natural person customers, and Rule 2165 permits a member to place a temporary hold on a disbursement of funds or securities when financial exploitation is reasonably suspected.

Question 35Supervision of General Broker-Dealer Activities

A firm learns that one of its registered representatives was named in a regulatory action involving a securities violation. What does FINRA Rule 4530 generally require?

  1. Reporting to the SEC on Form 8-K within four business days.
  2. Reporting only if the amount involved exceeds $100,000.
  3. Reporting at the discretion of the firm's compliance officer.
  4. Reporting specified events to FINRA, generally within 30 calendar days of learning of the event. Correct answer.

Explanation

Rule 4530(a) requires a member to report specified events, such as certain regulatory actions, statutory disqualifications, and investment-related civil judgments, generally within 30 calendar days of learning of the event. Rule 4530(b) separately requires quarterly statistical reporting of certain customer complaints and internal conclusions.

Question 36Supervision of General Broker-Dealer Activities

A firm executes a principal transaction with a retail customer in a corporate bond that trades in an active market. Which statement describes the firm's pricing obligation?

  1. The mark-up must be disclosed in writing before the trade is executed.
  2. The firm may charge any mark-up the customer accepts in the account agreement.
  3. The fair pricing requirement applies only to municipal securities.
  4. The price must be reasonably related to the prevailing market price, and any mark-up must be fair. Correct answer.

Explanation

FINRA Rule 2121 requires that a member buy or sell at a price reasonably related to the current market price and that any mark-up, mark-down, or commission be fair, taking into account the market for the security, the firm's role, and the services provided.

Question 37Supervision of General Broker-Dealer Activities

A representative maintains a public social media page that describes an investment strategy and does not change. How do FINRA communications rules apply?

  1. Static posts are generally treated as retail communications that need principal approval. Correct answer.
  2. Social media content is exempt because it is not a written communication.
  3. All social media posts must be filed with FINRA before the page is published.
  4. Only content posted from a firm-owned device is covered by the rules.

Explanation

FINRA's communications rules apply to all media, including social media. Static content, such as a posted article or profile description, is generally treated as a retail communication subject to principal approval, while interactive content is typically treated as correspondence subject to the firm's review procedures.

Question 38Supervision of General Broker-Dealer Activities

Under FINRA Rule 3110, how frequently must a member firm inspect each office of supervisory jurisdiction?

  1. Only when a registered principal leaves the firm
  2. At least every three years
  3. At least annually Correct answer.
  4. At least every two years

Explanation

Rule 3110(c)(1)(A) requires an on-site inspection of every office of supervisory jurisdiction at least once each year. Branch offices that are not OSJs may be inspected on a longer cycle. The annual OSJ inspection is a core supervisory control.

Question 39Supervision of General Broker-Dealer Activities

By what deadline must a registered person complete the Regulatory Element of continuing education each year?

  1. By December 31 of the same calendar year
  2. Within 30 days after the person's registration anniversary
  3. Within 120 days after the end of the calendar year Correct answer.
  4. Every two years, measured from the date of initial registration

Explanation

FINRA Rule 1240 requires registered persons to complete the Regulatory Element by December 31 of each year, but a 120-day grace period extends the effective deadline to April 30 of the following year.

Question 40Supervision of General Broker-Dealer Activities

A firm's anti-money laundering compliance officer determines that a transaction is suspicious. Within what period must the firm file a Suspicious Activity Report?

  1. Within 60 calendar days
  2. Within 15 business days
  3. Before the end of the same business day
  4. Within 30 calendar days after initial detection Correct answer.

Explanation

The SAR rule requires filing within 30 calendar days after the firm initially detects facts constituting a suspicious transaction. The period may be extended by 30 days if no suspect is identified. Filing promptly is part of the firm's AML program.

Question 41Supervision of General Broker-Dealer Activities

Under Regulation T, what is the initial margin requirement when a customer purchases common stock?

  1. 50 percent Correct answer.
  2. 25 percent
  3. 30 percent
  4. 100 percent

Explanation

Regulation T sets the initial margin requirement for equity securities at 50 percent of the purchase price. The customer must deposit the required margin by the settlement date. Maintenance requirements are set separately by FINRA.

Question 42Supervision of General Broker-Dealer Activities

Within what period must a member firm report a transaction in a TRACE-eligible corporate bond to the TRACE system?

  1. Within 15 minutes Correct answer.
  2. By noon of the next business day
  3. Within 15 seconds
  4. By the end of the trading day

Explanation

FINRA rules require TRACE-eligible corporate bond transactions to be reported as soon as practicable, and in no event later than 15 minutes after execution. Timely reporting supports price transparency. Late reports may result in disciplinary action.

Question 43Supervision of General Broker-Dealer Activities

When a member firm receives a customer account transfer instruction through ACATS, within what period must it validate or take exception to the transfer?

  1. One business day
  2. Five business days
  3. Ten business days
  4. Three business days Correct answer.

Explanation

FINRA Rule 11870 requires the receiving member to validate the transfer instruction or take exception within three business days of receipt. This keeps the automated transfer process moving. Failure to act within the period can result in the transfer being completed.

Question 44Supervision of General Broker-Dealer Activities

Within what period must a member firm fingerprint a newly associated person who is subject to fingerprinting?

  1. Within 90 days after association
  2. Within 30 days after the person begins association with the firm Correct answer.
  3. Before the person's first day of employment
  4. Only upon a customer's written request

Explanation

SEC Rule 17f-2 requires fingerprints to be taken within 30 days after a person becomes associated with a member firm. The firm must submit the prints for processing and retain related records. Fingerprinting is a condition of employment for covered persons.

Question 45Supervision of General Broker-Dealer Activities

Under FINRA Rule 3110, how often must a member firm conduct a meeting for registered persons to review compliance and supervisory issues?

  1. At least annually Correct answer.
  2. Only after a regulatory examination
  3. At least quarterly
  4. Every two years

Explanation

Rule 3110(a)(7) requires a member firm to conduct at least one compliance meeting each year for all registered persons. The meeting may be held in person or by video conference. Its purpose is to review compliance matters and the firm's supervisory procedures.

Question 46Supervision of General Broker-Dealer Activities

A member firm has an office that is not an office of supervisory jurisdiction. Which characteristic makes the office an OSJ rather than a branch office?

  1. It is responsible for supervising the activities of another office Correct answer.
  2. It is located in a different state from the main office
  3. It has at least five registered representatives
  4. It handles only institutional customer orders

Explanation

An OSJ is an office that supervises other offices or has supervisory responsibilities beyond its own activities. A branch office conducts business but does not supervise other offices. The distinction drives inspection frequency.

Question 47Supervision of General Broker-Dealer Activities

How often must a member firm review its written supervisory procedures?

  1. Only when FINRA amends a rule
  2. Quarterly
  3. Every two years
  4. At least annually Correct answer.

Explanation

Rule 3110(b)(5) requires a member firm to review its written supervisory procedures at least annually. The review must consider changes in the firm's business and applicable rules. The firm must update the procedures as needed.

Question 48Supervision of General Broker-Dealer Activities

Which statement best describes the Firm Element of continuing education?

  1. It is an annual needs analysis and training plan tailored to the firm's business Correct answer.
  2. It is a FINRA-administered examination taken each year
  3. It is required only after a disciplinary action
  4. It applies only to registered principals

Explanation

The Firm Element requires each member to conduct an annual needs analysis and establish a training plan for covered persons. The content is based on the firm's business and regulatory developments. It is separate from the Regulatory Element.

Question 49Supervision of General Broker-Dealer Activities

A former registered representative has been away from the securities industry for more than two years. What must she do to become re-registered with a member firm?

  1. Pay a reinstatement fee to FINRA
  2. File a late Form U5 amendment
  3. Pass the appropriate representative-level qualification examination again Correct answer.
  4. Complete only the Regulatory Element

Explanation

Under FINRA's two-year rule, a representative-level qualification expires if the person is not associated with a member firm for two consecutive years. To re-register, the person must requalify by passing the applicable examination. The SIE has a separate four-year validity period.

Question 50Supervision of General Broker-Dealer Activities

How long must a member firm retain retail communications under FINRA Rule 2210?

  1. Three years from the date of last use, with the first two years readily accessible Correct answer.
  2. Five years from the date of first use
  3. One year from first use
  4. Seven years from the date of last use

Explanation

Rule 2210 requires retail communications to be retained for three years from the date of last use. The first two years must be in an easily accessible place. The records must be available to FINRA on request.