Series 26 flashcards

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

Office of supervisory jurisdiction

A branch office where a registered principal supervises activities, conducts final approval of transactions, or handles customer accounts; FINRA requires annual inspection of each OSJ.

Branch office inspection cycle

Under FINRA Rule 3110(c), non-OSJ branch offices must be inspected at least every three years, while offices of supervisory jurisdiction require annual inspection.

Gift limit Rule 3220

FINRA Rule 3220 prohibits gifts or gratuities over $100 per person per year to employees of other members or counterparties without the member's prior written consent.

Outside business activity notice

An associated person must give the member prior written notice before accepting outside employment or compensation; the member evaluates and may approve or reject the activity under FINRA Rule 3270.

Private securities transaction

An associated person's sale of securities outside the member requires prior written notice; the member must record and supervise the transaction or expressly disapprove it under FINRA Rule 3280.

Principal pre-approval of communications

FINRA Rule 2210 requires a registered principal to approve retail communications before first use and to retain the communication and approval records for three years.

Customer complaint log

A member must log written customer complaints, review and investigate them, respond to the customer, and report certain complaints to FINRA under applicable rules.

Deferred annuity principal review

FINRA Rule 2330 requires a registered principal to review and approve a deferred variable annuity purchase or exchange before the order is transmitted for processing.

Open-end fund redemption

Open-end mutual fund shares are redeemable at the fund's next computed net asset value; the fund must calculate NAV at least once each business day.

Closed-end fund trading

A closed-end fund issues a fixed number of shares that generally trade on an exchange; the market price can be above or below net asset value.

Unit investment trust

A unit investment trust holds a fixed, unmanaged portfolio for a set term, issues redeemable units, and terminates on a specified maturity date.

Diversified company 75% test

A diversified investment company must place at least 75% of assets in cash, government securities, and other securities limited to 5% per issuer and 10% of voting securities.

Front-end load breakpoint

A breakpoint is a quantity discount that reduces a mutual fund's front-end sales charge when the purchase reaches a specified investment amount.

Letter of intent

A letter of intent lets an investor qualify for a reduced sales charge by committing to purchase a specified mutual fund amount within a stated period, often 13 months.

Class B shares

Class B mutual fund shares typically impose a contingent deferred sales charge that declines over time and may convert to Class A shares after a period.

Money market fund Rule 2a-7

Money market funds seek a stable $1 NAV and must follow SEC Rule 2a-7 limits on portfolio maturity, credit quality, and diversification.

Variable contract prospectus

Variable annuity and variable life contracts are securities and must be sold by a prospectus that discloses fees, risks, and investment objectives.

Separate account

A separate account is an insurer's segregated investment account that holds variable contract assets and is registered as an investment company under the 1940 Act.

Accumulation unit

An accumulation unit measures the value of a variable contract during the accumulation phase before annuitization, when value fluctuates with subaccount performance.

Annuity unit

An annuity unit measures the amount of each variable annuity income payment during the payout phase and varies with subaccount investment performance.

Rule 2330 suitability

FINRA Rule 2330 requires reasonable-basis and customer-specific suitability reviews for deferred variable annuity purchases and exchanges, including surrender cost and benefit comparisons.

Section 1035 exchange

A Section 1035 exchange allows a tax-deferred transfer from an existing annuity or life insurance contract to a new annuity or life contract.

Variable life death benefit

A variable life insurance death benefit may increase or decrease with the performance of subaccounts, subject to any minimum guaranteed death benefit stated in the contract.

Mortality and expense charge

A mortality and expense risk charge is a recurring variable contract fee that compensates the insurer for insurance guarantees and administrative risks.

Form U4 filing

Form U4 is the uniform application used to register associated persons with FINRA; it includes employment history, fingerprints, and required disclosure questions.

Regulatory Element timing

FINRA's Regulatory Element continuing education is due within 120 days of the second anniversary of registration and every three years thereafter.

Firm Element training

The Firm Element is an annual continuing education program that a member firm must establish and deliver based on its business and associated persons' needs.

Form U5 deadline

A member must file Form U5 within 30 days after an associated person's registration terminates and amend it within 30 days of learning a reportable event.

SAR filing deadline

A suspicious activity report must be filed with FinCEN within 30 days after the member detects a suspicious transaction, and the filing is confidential.

Currency transaction report

A currency transaction report must be filed for cash transactions exceeding $10,000 in a single business day, with certain exemptions available.

Regulation S-P

Regulation S-P requires financial institutions to provide privacy notices, offer opt-out rights where applicable, and safeguard customer nonpublic personal information.

Statutory disqualification

Statutory disqualification prevents a person from associating with a member without FINRA approval after certain criminal, regulatory, or financial events.