Series 82 flashcards
Series 82 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Rule 506(b)
- Regulation D exemption allowing private placements without general solicitation, with up to 35 non-accredited purchasers who meet sophistication standards and unlimited accredited investors.
- Rule 506(c)
- Regulation D exemption permitting general solicitation and advertising if all purchasers are accredited investors and the issuer takes reasonable steps to verify accredited status.
- General solicitation
- Any advertisement, seminar, or public communication that offers securities to the public without a pre-existing substantive relationship with the recipient.
- Pre-existing substantive relationship
- A relationship where the firm has enough information to evaluate the customer's financial circumstances and sophistication before offering securities, established prior to solicitation.
- Finder's fee
- Compensation paid to an unregistered person for soliciting investors; may violate Section 15(a) unless the person is a registered broker-dealer.
- Cold calling rules
- Solicitations must comply with FINRA Rule 2210 and FTC Do Not Call Registry; firms must maintain do-not-call lists and honor requests within a reasonable time.
- Retail communication
- Any written or electronic communication distributed to more than 25 retail investors within a 30-day period; requires principal approval before use.
- Seminar disclosures
- Presentations must be fair and balanced, include risk disclosures, and not omit material facts; firms must retain records of seminar materials.
- Customer Identification Program (CIP)
- Requires firms to collect name, date of birth, address, and identification number, and verify identity within a reasonable time using documentary or non-documentary methods.
- Accredited investor (individual)
- An individual with net worth over $1 million excluding primary residence, or income over $200,000 ($300,000 joint) in each of the last two years.
- Qualified purchaser
- An individual with at least $5 million in investments, or a company with $5 million, or a trust with $5 million not formed to acquire the securities.
- Regulation Best Interest (Reg BI)
- Requires broker-dealers to act in the best interest of retail customers, considering reasonable-basis, customer-specific, and quantitative suitability factors, and disclose material conflicts.
- Suitability (FINRA Rule 2111)
- Requires a reasonable basis to believe a recommendation is suitable based on the customer's investment profile, including risk tolerance, time horizon, and liquidity needs.
- Trusted contact person
- An individual designated by the customer whom the firm may contact if it suspects financial exploitation or diminished capacity; required for retail accounts.
- Account update requirement
- Firms must update retail account information at least every 36 months; changes in investment objectives require customer confirmation.
- Options account approval
- Firms must obtain a signed options agreement and approve the account before trading; the agreement must be delivered within 15 days of approval.
- FINRA Rule 2210
- Governs communications with the public, classifying them as correspondence, retail communications, or institutional communications, each with different review and approval requirements.
- Retail communication approval
- Must be approved by a registered principal before first use; correspondence is subject to post-use review and supervision.
- Private placement memorandum
- Offering document that includes risk factors, use of proceeds, management bios, financial statements, and investor suitability standards; firms must conduct reasonable due diligence.
- ACATS
- Automated Customer Account Transfer Service; transfers customer accounts between broker-dealers; receiving firm submits instruction and delivering firm validates within one business day.
- Recordkeeping (FINRA Rule 4511)
- Records of communications relating to recommendations must be retained for at least three years, the first two in an easily accessible place.
- Form U4
- Used to register representatives; disciplinary actions must be disclosed within 30 days of the event, and firms must amend promptly.
- Form U5
- Filed within 30 days of termination and includes reason for termination; used to terminate registration.
- Customer complaint log
- Firms must record and retain customer complaints for four years; a complaint log is required under FINRA Rule 4530.
- Subscription agreement
- Contract signed by investor to purchase securities in a private placement; firms must verify accredited investor status for Rule 506(c) offerings.
- Confirmation (SEC Rule 10b-10)
- Must be sent at or before completion of transaction and include security description, price, commission, and settlement date.
- Escrow in private placements
- Funds are held in escrow until the minimum offering amount is raised; if minimum is not met, funds must be returned promptly.
- Delivery versus payment (DVP)
- Requires payment upon delivery of securities; free delivery allows delivery without payment and is riskier.
- Blue sky laws
- State securities laws; issuers must comply with state registration or exemptions; FINRA Rule 5123 requires filing private placement materials within 15 days of first sale.
- Trade settlement (T+2)
- Most securities settle on T+2; private placements may have different closing dates specified in the subscription agreement.
- Order ticket requirements
- Must include time of receipt, terms, and account identification; records must be retained for three years.
- Customer instruction verification
- Firms must verify identity and authorization before executing transactions; verbal instructions should be documented.