Who is eligible to have an ABLE account?
Anyone who was diagnosed with a disability prior to age 26 - tax-advantaged savings account owned by and used for the benefit of persons diagnosed with a disability prior to age 26. Note that an individual does not need to be under the age of 26 to have an ABLE account, instead their disability must have been diagnosed prior to age 26. (ch 12)
The collection, analysis, and dissemination of financial data is carried out by which of these entities to help safeguard the US financial system?
Financial Crimes Enforcement network (FinCEN) (not the SEC, FINRA, or the CBO) (ch 14) - goal is safeguard the US financial system from illegitimate use
In the process of registering as a member firm with FINRA, a non-bank BD that will transact general securities mustI. file a form BD II. obtain SEC approvalIII. pay filing fees to FINRAIV. become a member of SIPC
I File a form BD, III pay filing fees to FINRA, and IV become a member of SIPC - also must submit a New Member Agreement to FINRA. the firm is registered with the SEC when it receives its FINRA membership; no further action or approval is necessary from the SEC (ch 13)
Variable Annuities are subject to which securities regulations?
the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Securities Exchange Act of 1934Like MFs, variable annuities are subject to most securities regulations. Also the Securities Exchange Act of 1933. Chapter 12
Through which function to BDs engage in the lending business and earn interest on loans of cash or securities to their customers?
Margin All loans are secured by securities held in the customer's own margin account. chapter 11
What is true regarding FINRA limits on gifts and gratuities?
1) a firm is not restricted from employing persons associated with other firms by FINRA's rule on gifts and gratuities as long as there is a written employment agreement and 2) a firm may give gifts and gratuities to employees of other firms if they exceed no more than $100 annually (chapter 14)
If a rep comes into contact with suspicious activity involving currency transactions, the rep should
report the activity to his supervisorSame if it is potential money laundering activity. the rep doesn't file CTRs or SARs. These are filed if necessary by the firm's Anti-Money Laundering officer on behalf of the firm Chapter 14
If a bond trades with a dollar price, the confirmation must include which of the following types of yield?a) current yieldb) taxable-equivalent yieldc) holding period yield d) yield to worst
d) yield to worstOn debt securities made at a dollar price, the confirmation must include the dollar price and the yield to worst, which is the lower of the yield to call or yield to maturity chapter 11
Which of the following professions is not specifically excluded from registration as an investment adviser?a) teacherb) lawyerc) financial plannerd) accountant
c) financial plannerLawyers, accountants, engineers and teachers are excluded from registration. financial planners generally are not if they provide investment advice or analysis. chapter 13
A customer would be permitted to place only unsolicited orders in an account if
the client did not provide certain financial information on the new account form (chapter 11)
A RR has violated an SEC rule, resulting in termination of employment. This individual is now the subject of a statutory disqualification and
is ineligible for registration (chapter 13) (NOT: must pay a fine in order to be able to regain eligible employment status, must wait 30 days before applying for a new registration, or may work in any role that does not require registration)
Judy started a 529 plan for her daughter three years ago. If she earns $2,000 on its investments this year, how is this amount treated for income tax purposes now, assuming she does not plan to start taking distributions for college expenses for several more years?
It is tax-deferred until distribution - investment earnings accumulate on a tax-deferred basis in 529 plans. there is no IRS reporting until distributions are made. then, distributions used for qualified education expenses are tax-free (chapter 12)
A BD has frozen a cash account because the customer has not paid for a securities purchase. when must the bD sell out the securities?
on the morning of the 5th business day after the trade was made - if no extension is received, the position must be sold then, and the account must be frozen for 90 days (chapter 11)
XYZ makes an employer contribution to its 401(k) plan in the amount of 1% of the compensation of each eligible participant. what type of contribution is it?
Profit-sharing Profit-sharing contributions are a percentage of compensation for all eligible employees. they are determined on an annual basis and can be as low as zero for any given year (chapter 12)
MSRB rules permit all of the following gifts excepta) season tickets to attend all home games of the local pro football teamb) a meal at a nice restaurant hosted by a fund rep for 3 muni securities reps that cost $600c) reimbursement for air travel and lodging of $650 for attendance at a 1-day training event hosted by another firm across the country d) several logo jackets given in one year by the firm to muni securities rep that totaled nearly $200 in value
a) season ticketsTo avoid influencing behavior, municipal securities firms may not give gifts of more than $100 per year in connection with the business of the recipient's employer. Occasional meals and tickets to shows and sporting events, and reimbursement of reasonable amounts of deductible business expenses do not violate the gift rule. However, season tickets to a sports team would be considered excessive (chapter 14)
In general, unless an exception applies, which types of RIAs are prohibited from registering with the SEC
small and mid-size (chapter 13)
Donald is employed by a firm that offers a straight profit-sharing plan. he wants to know if he and/or the firm are required to contribute. answer?
neither employees nor the employer are required to make annual contributions. profit-sharing plans are designed for flexibility. they allow employers to make contributions in profitable years (or whenever they wish) and make little to no contributions in other years. key requirement is that the same percentage of salary must be contributed for all eligible plan participantschapter 12
for existing customer accounts, how often are BDs required to send a written notice to the customer for verification of account info
every 3 years ensure the account is still appropriate and the info on file is still accurate. chapter 11
Which of the following is not a type of communications with the public, as defined by FINRA Rule 2210?a) retail communicationsb) research reportsc) correspondenced) institutional communication
b) research reports
When does the SEC require that the lead underwriter of a public offering to publish a tombstone ad?
There is no requirement
Trades involving securities with control relationships require all of the following except
prior approval by the principal must be disclosed in writing to customers no later than at or prior to the completion of the transaction. must have written disclosure of the relationship to the customer. must have a description of the nature of the control (ch 14)
CTRs are filed with
the IRS
SEC Rule 145 addresses the
reclassification of an issuer's securities, and all of the accompanying documentation standards for investor protection (chapter 8)
if a customer's order was filled in the third market, the pricing and liquidity available for that order
should be the same or better than was available in the security's primary listing market
accredited PARTNERSHIP investor must have total assets of at least
5mm (for corporations, partnerships or trusts)
RMDs must begin by
the following April 1st after you turn 72
during an IPO, when must a final prospectus be delivered to an investor who purchases securities
before the purchase is completed (ch 8)