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Series 6 study materials
Series 6 study resources

Series 6 practice questions

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Question 1Seeks Business for the Broker-dealer from Customers and Potential Customers

A registered representative wants to give a $150 gift basket to a purchasing manager who works at another FINRA member firm. Under FINRA rules, the maximum value of gifts the representative may give this individual in a year is:

  1. $250
  2. $100 Correct answer.
  3. $500
  4. $1,000

Explanation

FINRA Rule 3220 limits gifts and gratuities given to an employee or agent of another person, in relation to that employer's business, to $100 per individual per year. Anything of value above that amount, whether cash or merchandise, is prohibited.

Question 2Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA's telemarketing rules, an outbound telephone solicitation to a prospective retail customer may be placed only between:

  1. 9:00 a.m. and 9:00 p.m. local time at the called party's location
  2. 8:00 a.m. and 9:00 p.m. local time at the called party's location Correct answer.
  3. 8:00 a.m. and 8:00 p.m. local time at the caller's office
  4. 9:00 a.m. and 5:00 p.m. local time at the caller's office

Explanation

FINRA Rule 3230 prohibits outbound telephone solicitations before 8:00 a.m. or after 9:00 p.m. local time at the location of the person being called. The caller's own time zone is irrelevant to the analysis.

Question 3Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA Rule 2210, "correspondence" is best described as a written communication made available to:

  1. More than 25 retail investors within any 30-calendar-day period
  2. 25 or fewer retail investors within any 30-calendar-day period Correct answer.
  3. Any number of institutional investors within any 30-calendar-day period
  4. 25 or fewer retail investors within any 90-calendar-day period

Explanation

Correspondence covers written communications distributed to 25 or fewer retail investors within any 30-calendar-day period. Once the audience exceeds 25 retail investors in that window, the piece becomes a retail communication.

Question 4Seeks Business for the Broker-dealer from Customers and Potential Customers

Which statement correctly describes the approval requirement for retail communications?

  1. Every retail communication must be approved by FINRA before first use
  2. A registered principal must approve a retail communication before it is used Correct answer.
  3. A retail communication may be used once a supervisor has received a copy
  4. Only retail communications that mention performance need approval

Explanation

FINRA Rule 2210 requires that a registered principal approve retail communications before first use. Correspondence and institutional communications are subject to supervisory procedures but do not require pre-use approval.

Question 5Seeks Business for the Broker-dealer from Customers and Potential Customers

A registered representative wants to pay an unregistered friend $200 for each new client the friend brings to the firm. This arrangement is:

  1. Prohibited, because paying an unregistered person for referrals is barred Correct answer.
  2. Permitted, if each payment is capped at $100 per referral
  3. Permitted, because the friend is not an employee of the firm
  4. Permitted, if the friend signs a written disclosure form for each client referred

Explanation

FINRA rules prohibit a member or its associated persons from paying transaction-based compensation to an unregistered person for soliciting securities business. Only appropriately registered persons may be compensated for bringing in brokerage accounts, and disclosure does not cure the problem.

Question 6Seeks Business for the Broker-dealer from Customers and Potential Customers

A retail communication includes a client testimonial praising the representative's service. FINRA rules require the piece to disclose:

  1. Whether the client was paid and whether the result is typical Correct answer.
  2. The name of the principal who approved the communication
  3. The client's account number and the date the account was opened
  4. Only that past performance does not guarantee future results

Explanation

A testimonial in a retail communication must disclose whether the person giving it was compensated, and if the experience is not representative, that it may not reflect the experience of other clients. Both disclosures guard against misleading impressions.

Question 7Seeks Business for the Broker-dealer from Customers and Potential Customers

An advertisement prepared by a representative states that a mutual fund "cannot lose money because professionals manage it." This statement is:

  1. Acceptable, if a principal approves the piece before use
  2. Acceptable, if the fund has a 10-year track record
  3. Prohibited, because it is an exaggerated claim Correct answer.
  4. Acceptable, if printed in smaller type than the rest of the text

Explanation

Retail communications must be fair and balanced and may not contain unwarranted or exaggerated claims. Stating that a mutual fund cannot lose money misrepresents the nature of the investment, and neither a long track record nor principal approval can cure that.

Question 8Seeks Business for the Broker-dealer from Customers and Potential Customers

During a cold call, a prospect asks a representative to stop calling. Under federal telemarketing rules, the firm must record the request and honor it, keeping the record for at least:

  1. One year
  2. Three years
  3. Six months
  4. Five years Correct answer.

Explanation

A firm-specific do-not-call request must be documented and honored, and the record of the request must be retained for at least five years. This is separate from, and in addition to, checking the national do-not-call registry.

Question 9Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative prepares a brochure for a mutual fund that shows average annual total returns for 1-, 5-, and 10-year periods. The firm must:

  1. Obtain SEC approval of the brochure before it is distributed to customers
  2. File it with FINRA's ad department within 10 business days of first use Correct answer.
  3. File it with the SEC within 30 days after the brochure is first used
  4. File it with FINRA's ad department at least 30 days before first use

Explanation

Retail communications that include investment company performance must be filed with FINRA's Advertising Regulation Department within 10 business days of first use. Principal approval is still required before the piece is used.

Question 10Seeks Business for the Broker-dealer from Customers and Potential Customers

A broker-dealer has been a FINRA member for eight months. Its retail communications must be:

  1. Filed with FINRA at least 10 business days before first use Correct answer.
  2. Not filed, because new firms are exempt from filing requirements
  3. Filed with FINRA within 30 days after the end of each quarter
  4. Filed with FINRA within 10 business days after first use

Explanation

A firm that has been a FINRA member for less than one year must file its retail communications with FINRA at least 10 business days before first use. This heightened requirement gives FINRA an opportunity to review a new firm's marketing.

Question 11Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm wants to cold-call a person who bought a mutual fund from the firm 14 months ago and has had no contact since. Under federal telemarketing rules, the call is:

  1. Permitted, only if the person re-registers on the national registry
  2. Permitted, only with the person's prior written consent
  3. Prohibited, because the relationship ended when the purchase was completed
  4. Permitted, because the relationship lasts 18 months after the transaction Correct answer.

Explanation

An existing business relationship exempts a call from the national do-not-call registry for 18 months after the last transaction, or 3 months after an inquiry or application. A purchase 14 months ago therefore still supports the call.

Question 12Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative takes a client to a baseball game, pays $180 for two tickets, and attends the game with the client. Under FINRA rules, this is:

  1. Prohibited, unless the client reimburses the difference in cost
  2. Reportable to FINRA on the firm's annual certification
  3. A violation, because the tickets cost more than the $100 gift limit
  4. Permissible as ordinary business entertainment, since it is reasonable Correct answer.

Explanation

The $100 gift limit does not apply to ordinary business entertainment that is reasonable in cost and not excessive, particularly when the representative attends. Because the representative accompanied the client and the expense was reasonable, no gift-limit violation occurs.

Question 13Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative wants to post a firm-approved article about a fund on the firm's public social media page. Under FINRA guidance, this static post is:

  1. Correspondence that requires no review before it is posted
  2. A retail communication requiring principal approval before posting Correct answer.
  3. Permitted without approval because social media is interactive
  4. An institutional communication, which is exempt from review

Explanation

Static content placed on a social media site is treated as a retail communication because it can be viewed by anyone, so a registered principal must approve it before it is posted. Interactive content, such as user comments, is handled through supervision rather than pre-approval.

Question 14Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA recordkeeping requirements, a firm must retain copies of its retail communications for:

  1. Three years, with the first two years readily accessible Correct answer.
  2. Five years, with the first five years readily accessible
  3. Three years, with all records stored off-site
  4. Six years, with the first two years readily accessible

Explanation

Retail communications must be preserved for three years, and the first two years of records must be kept in an easily accessible place. Off-site storage alone will not satisfy the accessibility requirement.

Question 15Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative is scheduled to appear on a live television program to discuss mutual funds. Which statement about the appearance is accurate?

  1. The broadcast needs no supervision because it is live
  2. A script must be filed within 10 business days after the broadcast
  3. The broadcast is exempt from FINRA filing requirements Correct answer.
  4. The broadcast must be filed with FINRA before it airs

Explanation

Retail communications broadcast live over radio or television are exempt from the FINRA filing requirement. They remain subject to the content standards and to the firm's normal supervisory and approval procedures.

Question 16Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative plans a seminar for prospective clients and mails a printed invitation describing the fund that will be presented. Under FINRA rules, the invitation is:

  1. A retail communication that requires principal approval before mailing Correct answer.
  2. Required to be filed with FINRA before it is mailed
  3. Subject only to the branch manager's verbal approval
  4. Not an advertisement, so no approval is needed

Explanation

A written seminar invitation that describes the product being presented is a retail communication and must be approved by a registered principal before it is used. Filing is a separate issue that depends on the content, such as whether performance figures or rankings appear.

Question 17Seeks Business for the Broker-dealer from Customers and Potential Customers

A printed brochure discussing a variable annuity's contract features and showing historical performance must:

  1. Be approved by the state insurance department before use
  2. Omit any discussion of fees to keep the message clear
  3. Be accompanied or preceded by a current prospectus Correct answer.
  4. Show only the best-performing subaccounts

Explanation

Because a variable annuity is a security, sales material must be preceded or accompanied by the current prospectus and must present performance in a standardized manner. Highlighting only top subaccounts or omitting fees would be misleading.

Question 18Seeks Business for the Broker-dealer from Customers and Potential Customers

Before recommending an investment company product to a new prospect, a representative gathers information on the customer's objectives, finances, risk tolerance, and time horizon because:

  1. The information is needed to determine the sales charge
  2. The prospectus requires the representative to ask those questions
  3. A written suitability letter is required for every new account
  4. Recommendations must be suitable for that particular customer Correct answer.

Explanation

FINRA's suitability rule requires a recommendation to be suitable for the specific customer based on the customer's investment profile. That is why the representative must learn the customer's objectives, financial situation, risk tolerance, and time horizon before recommending a product.

Question 19Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm mails invitations to a free dinner seminar for retirees at which a variable annuity will be presented. Which statement about the invitation is correct?

  1. No approval is needed because the seminar is educational and the meal is free
  2. It may promise a guaranteed lifetime return if the annuity has a fixed account option
  3. It is retail communication that must be fair and balanced and approved by a principal Correct answer.
  4. Only the state insurance department must approve the invitation before mailing

Explanation

Invitations to sales seminars, including free-meal events aimed at retirees, are retail communications subject to the content standards and to principal approval before use. Firms must also supervise seminars directed at seniors with heightened care because of the potential for misleading sales practices.

Question 20Seeks Business for the Broker-dealer from Customers and Potential Customers

A sales piece for a mutual fund includes a chart projecting that a $10,000 investment will grow to $21,589 in ten years at an assumed 8% return. This chart is:

  1. Acceptable, if a principal approves the piece before use
  2. Acceptable, if the assumed rate of return is disclosed
  3. Acceptable, if the chart is labeled as hypothetical
  4. Prohibited, because projections of investment results may not be used Correct answer.

Explanation

Retail communications may not project or forecast investment results, and disclosing the assumed rate or labeling the chart hypothetical does not cure the problem. Past performance may be shown under the applicable rules, but future results may not be predicted.

Question 21Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative wants to hand out copies of a magazine article that praises a fund the firm distributes. FINRA rules require that the reprint:

  1. Be approved by a principal and identify the source and date Correct answer.
  2. Be edited to remove any negative comments about the fund
  3. Be distributed only to institutional investors
  4. Be filed with FINRA within 10 business days of its first use

Explanation

A third-party reprint used as sales material must be approved by a registered principal before distribution and must identify the publication and the date of the article. It also must be reprinted in its entirety and remain fair and balanced.

Question 22Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm creates a brochure about a mutual fund's investment strategy and distributes it only to institutional investors. This brochure is:

  1. Correspondence that must be reviewed within 10 business days
  2. Institutional communication needing supervision but not pre-approval Correct answer.
  3. A retail communication because it mentions a mutual fund
  4. A retail communication, because brochures about funds always require filing

Explanation

A written communication distributed only to institutional investors is an institutional communication. It is not subject to the principal pre-approval or filing requirements that apply to retail communications, but the firm must supervise it and it may not be misleading.

Question 23Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative distributes the same fund fact sheet to 30 retail investors and 15 institutional investors during a single 30-day period. FINRA would treat the fact sheet as:

  1. An institutional communication because institutions also received it
  2. Correspondence, because fewer than 50 people received it
  3. Outside FINRA's communication rules, because the audience was mixed
  4. A retail communication, since over 25 retail investors received it Correct answer.

Explanation

The category depends on how many retail investors receive the piece, not on the total audience. Because more than 25 retail investors received the fact sheet within 30 days, it is a retail communication subject to principal approval and the applicable filing rules.

Question 24Seeks Business for the Broker-dealer from Customers and Potential Customers

When making a cold call to a prospect, a representative should promptly:

  1. Identify himself, the firm, and the purpose of the call Correct answer.
  2. Give only the firm's name and then wait for questions
  3. Withhold the purpose of the call until the prospect shows interest
  4. Use a fictitious name to protect personal privacy

Explanation

Telemarketing rules require the caller to identify himself or herself, name the firm on whose behalf the call is made, and state that the call is a sales call. Withholding that information or using a false name would be deceptive.

Question 25Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative mails an identical four-page sales piece to 20 prospects in the first week and to another 20 prospects in the third week. Under FINRA's communication rules, the piece is:

  1. An institutional communication, because the recipients are unknown to the firm
  2. Exempt from review, because the piece contains no performance data
  3. A retail communication, because identical mailings in 30 days are aggregated Correct answer.
  4. Correspondence, because each individual mailing went to 25 or fewer people

Explanation

Identical communications distributed to retail investors are counted together over any 30-calendar-day period, so splitting a mailing into batches does not avoid the retail communication requirements. With 40 retail recipients inside 30 days, the piece is a retail communication requiring principal approval before use.

Question 26Seeks Business for the Broker-dealer from Customers and Potential Customers

During an outbound telephone solicitation to a prospective retail customer, FINRA's telemarketing rules require the caller to disclose:

  1. the caller's name and the firm's FINRA membership number and principal office address.
  2. only the firm's name and the purpose of the call.
  3. the caller's name, the firm's name, and the firm's telephone number or address. Correct answer.
  4. the caller's CRD number and the firm's business address.

Explanation

FINRA Rule 3230 requires that, at the start of an outbound call, the caller state his or her name, the name of the firm, and the firm's telephone number or address. This lets the customer identify the caller and contact the firm.

Question 27Seeks Business for the Broker-dealer from Customers and Potential Customers

To comply with national do-not-call registry requirements, a broker-dealer must update its call list against the registry:

  1. at least every 31 days. Correct answer.
  2. once every calendar year.
  3. only before the first call to a new prospect.
  4. once every quarter.

Explanation

The national registry rules require a telemarketer to access and update its do-not-call data at least every 31 days. Calls to registered numbers are prohibited unless a specific exception applies.

Question 28Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA Rule 2210, a written communication distributed to which of the following is a 'retail communication'?

  1. Any number of institutional investors only.
  2. 25 or fewer retail investors within any 30-day period.
  3. More than 25 retail investors within any 30-calendar-day period. Correct answer.
  4. Any number of retail investors in a single day only, regardless of the period.

Explanation

Rule 2210 defines a retail communication as any written communication distributed or made available to more than 25 retail investors within any 30-calendar-day period. Distribution to 25 or fewer retail investors in that window is correspondence.

Question 29Seeks Business for the Broker-dealer from Customers and Potential Customers

A written communication that is distributed or made available only to institutional investors is classified as:

  1. a retail communication.
  2. a public appearance.
  3. correspondence.
  4. an institutional communication. Correct answer.

Explanation

Rule 2210 treats written materials made available solely to institutional investors as institutional communications. They are subject to supervision but not to the retail communication approval and filing requirements.

Question 30Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA Rule 2210, a 'retail investor' is:

  1. a person who invests less than $100,000.
  2. any person other than an institutional investor. Correct answer.
  3. only a natural person who is a current customer.
  4. only a person with an existing brokerage account at the firm.

Explanation

Rule 2210 defines a retail investor as any person other than an institutional investor, whether or not that person has an account with the firm. The definition turns on status, not account size or relationship.

Question 31Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative is asked to speak impromptu about a mutual fund at a local community meeting. Under FINRA rules, this is:

  1. correspondence.
  2. an institutional communication.
  3. a public appearance. Correct answer.
  4. a retail communication.

Explanation

A public appearance includes unscripted or impromptu oral statements about securities made in a public setting. Public appearances are supervised but are not written communications.

Question 32Seeks Business for the Broker-dealer from Customers and Potential Customers

Which statement about a registered representative's correspondence is correct?

  1. It must be reviewed by a principal but need not be pre-approved. Correct answer.
  2. It must be approved by a principal before it is sent to any retail investor.
  3. It is exempt from supervisory review.
  4. It must be filed with FINRA within 10 business days.

Explanation

Correspondence must be supervised and reviewed by a registered principal, but the rule does not require pre-use approval as it does for retail communications. Review may occur after the material has been sent.

Question 33Seeks Business for the Broker-dealer from Customers and Potential Customers

For purposes of the telemarketing rules, an existing business relationship created by a customer's inquiry lasts:

  1. 18 months from the inquiry.
  2. 3 months from the inquiry. Correct answer.
  3. 6 months from the inquiry.
  4. 24 months from the inquiry.

Explanation

A customer inquiry creates an existing business relationship for three months, during which the do-not-call restrictions do not apply. A purchase or transaction creates an 18-month relationship.

Question 34Seeks Business for the Broker-dealer from Customers and Potential Customers

Under the Telephone Consumer Protection Act, an autodialed marketing call to a wireless telephone number requires:

  1. a check of the national registry only.
  2. prior express written consent. Correct answer.
  3. no consent if the number is publicly listed.
  4. only the prospect's verbal permission.

Explanation

The TCPA requires prior express written consent before autodialed or prerecorded marketing calls or texts to wireless numbers. Verbal permission and registry screening are not sufficient.

Question 35Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm sends commercial emails to prospective clients. Under CAN-SPAM, each email must:

  1. be sent only between 8 a.m. and 9 p.m. local time.
  2. be filed with FINRA before it is sent.
  3. include a working opt-out and the firm's physical postal address. Correct answer.
  4. include the representative's CRD number and the firm's FINRA membership number.

Explanation

CAN-SPAM requires commercial email to include accurate header information, a clear opt-out mechanism, and the sender's valid physical postal address. Opt-out requests must be honored promptly.

Question 36Seeks Business for the Broker-dealer from Customers and Potential Customers

A retail communication for a money market fund that shows yield must present:

  1. the current 7-day yield. Correct answer.
  2. the total return since inception.
  3. a projected annual yield.
  4. the 30-day SEC yield.

Explanation

Money market fund yield must be stated as the current 7-day yield computed under SEC rules. Any quotation must also disclose that the yield is not insured and may fluctuate.

Question 37Seeks Business for the Broker-dealer from Customers and Potential Customers

A retail communication compares a fund's returns with the returns of the S&P 500. The communication should:

  1. state that similar future results are likely.
  2. identify the index and note that it is unmanaged. Correct answer.
  3. leave out the index name to avoid confusing prospective investors.
  4. show only the fund's returns.

Explanation

Comparisons must be fair and balanced, so the index must be identified and its unmanaged nature disclosed. Omitting that context can make the comparison misleading.

Question 38Seeks Business for the Broker-dealer from Customers and Potential Customers

A retail communication cites a fund's five-star rating from a financial magazine. The communication must disclose:

  1. only the fund's expense ratio.
  2. the source, date, and period of the rating. Correct answer.
  3. the representative's compensation.
  4. nothing, because an accurate rating speaks for itself.

Explanation

When a ranking or rating is used, the communication must disclose its source, the date, the period covered, and that the rating may not be representative. This gives investors the context needed to evaluate it.

Question 39Seeks Business for the Broker-dealer from Customers and Potential Customers

Under FINRA recordkeeping rules, a firm must retain records of customer complaints for:

  1. 3 years.
  2. 2 years.
  3. 6 years.
  4. 4 years. Correct answer.

Explanation

FINRA requires complaint records to be kept for four years. The longer period reflects the importance of complaint history in supervision and regulatory review.

Question 40Seeks Business for the Broker-dealer from Customers and Potential Customers

FINRA's telemarketing rules require a member firm to maintain:

  1. a written do-not-call policy. Correct answer.
  2. a separate sales office for telephone calling.
  3. a list of every competitor's customers.
  4. a credit report for each prospect called.

Explanation

Rule 3230 requires written policies and procedures for maintaining an internal do-not-call list and honoring requests. The policy must be available for regulatory review.

Question 41Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm's static social media post promoting a mutual fund is:

  1. a retail communication requiring principal approval. Correct answer.
  2. correspondence needing post-review only.
  3. an exempt public appearance.
  4. an institutional communication that is exempt from principal review.

Explanation

Static posts that are written and available to a broad audience are retail communications, so a registered principal must approve them before posting. Interactive content is generally supervised after the fact.

Question 42Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm reposts a favorable third-party article about one of its funds on a firm-controlled page. The reposted content is:

  1. unrelated third-party content that is outside FINRA's communication rules.
  2. an exempt public appearance.
  3. correspondence exempt from approval.
  4. treated as a firm communication subject to Rule 2210. Correct answer.

Explanation

When a firm adopts or endorses third-party content by reposting it, the content becomes the firm's own communication. It must meet content, approval, and recordkeeping standards.

Question 43Seeks Business for the Broker-dealer from Customers and Potential Customers

A brochure states that a mutual fund's shares are 'backed by the full faith and credit of the U.S. government.' This statement is:

  1. acceptable if the fund invests only in securities issued by the U.S. Treasury.
  2. acceptable if a prospectus is attached.
  3. acceptable if a principal approves it.
  4. misleading because mutual fund shares are not insured or guaranteed. Correct answer.

Explanation

Mutual fund shares are not guaranteed or insured by any government agency, even when the fund holds government securities. A guarantee claim is misleading and violates the content standards.

Question 44Seeks Business for the Broker-dealer from Customers and Potential Customers

A retail communication for a mutual fund that includes performance figures must be filed with FINRA:

  1. at least 10 days before first use.
  2. within 30 days after first use.
  3. only when FINRA requests it.
  4. within 10 business days after first use. Correct answer.

Explanation

Retail communications that include investment company performance must be filed with FINRA's Advertising Regulation Department within 10 business days of first use. The filing is after use, not a pre-clearance requirement.

Question 45Seeks Business for the Broker-dealer from Customers and Potential Customers

A firm that uses a predictive dialer must ensure that abandoned calls do not exceed:

  1. 1% of calls per day.
  2. 3% of calls per day per campaign. Correct answer.
  3. 5% of calls per day.
  4. 10% of calls per month.

Explanation

FINRA's telemarketing rules limit abandoned calls to 3% of calls per day per campaign. Excessive abandonment rates indicate that the dialer is not being managed properly.

Question 46Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative is scheduled to deliver a scripted radio interview about a mutual fund. Under FINRA rules, the script must be:

  1. approved by the SEC.
  2. filed with FINRA before the broadcast.
  3. approved by a registered principal before the broadcast. Correct answer.
  4. reviewed only after the broadcast.

Explanation

Scripts and outlines used for scripted public appearances must be approved by a registered principal before use. Unscripted appearances are supervised but cannot be pre-approved.

Question 47Seeks Business for the Broker-dealer from Customers and Potential Customers

A representative uses a personal smartphone to text a client about a fund's performance. The text messages must be:

  1. deleted after 30 days.
  2. ignored because the smartphone is personally owned rather than firm-issued.
  3. captured and retained under the firm's recordkeeping procedures. Correct answer.
  4. forwarded to FINRA within 10 days.

Explanation

Business communications about securities, regardless of the device used, are firm records. Firms must capture and retain them under their recordkeeping and supervision systems.

Question 48Seeks Business for the Broker-dealer from Customers and Potential Customers

A mutual fund advertisement presents a non-standardized three-year cumulative return. The advertisement must also present:

  1. standardized average annual total returns for 1, 5, and 10 years or since inception. Correct answer.
  2. a projection of future returns.
  3. the fund's expense ratio only.
  4. the historical returns of the fund's investment adviser over a comparable period.

Explanation

If an advertisement shows non-standardized performance, it must also show the standardized average annual total returns for the required periods. This allows investors to compare funds on a consistent basis.

Question 49Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives

Under FINRA Rule 2090 (Know Your Customer), a member firm is required to:

  1. Obtain a consumer credit report on every customer before the first trade is placed
  2. Verify identity using a government database in every case without exception
  3. Review the customer's file only when a written complaint is received by the firm
  4. Use reasonable diligence to learn the essential facts about each customer Correct answer.

Explanation

Rule 2090 requires a member to use reasonable diligence, in regard to the opening and maintenance of every account, to know and retain the essential facts concerning every customer and every person authorized to act on the account. The obligation is ongoing, not a one-time or event-driven check.

Question 50Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives

Under the customer identification program rules, which set of items must a firm collect from each new customer?

  1. Name, address, employer, and marital status
  2. Name, date of birth, tax bracket, and investment objective
  3. Name, date of birth, address, and identification number Correct answer.
  4. Name, occupation, net worth, and investment objective

Explanation

The CIP rules require the firm to collect, at a minimum, the customer's name, date of birth (for individuals), address, and identification number before opening an account. Occupation, net worth, and tax bracket are part of the financial profile, not the CIP minimum.