Series 28 case studies
Series 28 · Put your knowledge to work in context.
The Series 28 - formally the Introducing Broker-Dealer Financial and Operations Principal Qualification Examination - is a FINRA qualification exam for individuals who will serve as the financial and operations principal (FINOP) of a broker-dealer that introduces its accounts to a clearing firm rather than clearing and carrying customer accounts itself. Because an introducing firm does not hold customer securities, the FINOP's work centers on the firm's own books: computing net capital, preparing and filing financial reports, maintaining the customer protection reserve computation and segregation records that flow from it, keeping the required books and records, and building the supervisory and internal control framework around those processes. The Series 28 case studies are 5 cases and about 2,804 words.
1The $585,000 Cushion: Deductions, the AI Ratio, and the 120% Line
Dunmore Securities LLC is a government securities broker-dealer that clears on a fully disclosed basis, does not hold customer funds or securities, and is not an OTC market maker. At the November 30 month-end the controller computes tentative net capital of 780,000 and proposes no deduction for three items: a 140,000 receivable from a customer for a Treasury purchase that settled 40 days ago and remains unpaid and unsecured; a 30,000 advance to its parent holding company; and 25,000 of prepaid rent for next year.
568 words, about 3 min2The Overfunded Reserve Account: A Hedge Fund Coded as Non-Customer
Calder Government Markets Inc. computes its Rule 15c3-3 customer reserve as of Friday, November 14.
545 words, about 3 min3The Nimbus Cloud: Retention, Vendor Undertakings, and Order Tickets
Ridgeline Securities, a government securities broker-dealer, keeps all order tickets, blotters and customer account records in a cloud system operated by Nimbus Data. The contract gives Ridgeline 90 days of online access; after that, Nimbus retrieves records only on a paid support ticket and refuses to sign any undertaking with regulators.
535 words, about 3 min4The Qualified Annual Report: Curing a Reserve Deficiency Without Concealing It
February 12: Wexler Brothers, a government securities broker-dealer with a December 31 fiscal year end, is finalizing its Rule 17a-5 annual reports. During fieldwork the controller found that on two weekly computation dates the customer reserve formula was understated, producing deficiencies of 85,000 in October and 22,000 in November, each cured within four business days.
559 words, about 3 min5Customer Treasuries in a Proprietary Account and a Supervisor Who Approves Himself
Halstead Securities is a government securities broker-dealer that clears fully disclosed through a bank custodian. On Monday the custodian reports that 12,000,000 face of a customer's fully paid Treasury note, which the customer sold on Thursday, was not received from the delivering counterparty - a fail to receive.
597 words, about 3 min