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FINRA Series 26 Exam: Key Regulations and Concepts, Exams of Business Finance

A comprehensive overview of the key regulations and concepts covered in the finra series 26 exam. It covers a wide range of topics, including finra rules, sec regulations, investment products, and compliance requirements. Structured in a question-and-answer format, making it an effective study resource for individuals preparing for the finra series 26 exam. The content covers essential information on supervisory procedures, investigations and sanctions, complaint handling, outside business activities, sales practices, and various investment products and their characteristics. By studying this document, individuals can gain a thorough understanding of the regulatory framework and industry best practices required to successfully pass the finra series 26 exam.

Typology: Exams

2023/2024

Available from 09/24/2024

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Download FINRA Series 26 Exam: Key Regulations and Concepts and more Exams Business Finance in PDF only on Docsity! FINRA Series 26 Exam 69 Questions with Verified Answers FINRA Rule 3010 - CORRECT ANSWER Rule that states each member must: I. Establish written supervisory procedures II. A registered principal is responsible for reviewing procedures III. Each rep is assigned to a principal in charge of supervising their activities, review of communication, & correspondence bw reps & the public FINRA Rule 8000 - CORRECT ANSWER Investigations & Sanctions. Must keep and maintain a current copy of the manual in a readily accessible place and provide it at a customer's request. FINRA Rule 9000 - CORRECT ANSWER Covers handling of securities violations and complaints. Think what happens after an investigation (Rule 8000) District Business Conduct Committee - CORRECT ANSWER Has initial jurisdiction in handling of complaints. Penalties the DBCC & Board of Governors can impose - CORRECT ANSWER Censure, fine, suspend, expel, bar FINRA Rule IM-3110 - CORRECT ANSWER Defines complaint, says each OSJ must maintain a record of complaints and any action taken. Complaint - CORRECT ANSWER Any written statement of a customer or any person acting on behalf of the customer alleging a grievance Code of Procedure - CORRECT ANSWER Deals with rules that cover actions by FINRA against member firms and their associated people Code of Arbitration - CORRECT ANSWER requires disputes be submitted for arbitration. Includes member and customer and/or associated person Director of Mediation - CORRECT ANSWER Person appointed by FINRA to administer proceedings FINRA Rule 3020 - CORRECT ANSWER Blanket fidelity bond. Minimum coverage amount is $25,000. Think 2=$25,000. FINRA Rule 3030 - CORRECT ANSWER Outside business activities. Must be written notification. FINRA Rule 3040 - CORRECT ANSWER Private securities transactions. Written notice must include: 1. proposed transaction 2. proposed role 3. compensation conditons Selling away - CORRECT ANSWER transaction affected outside the normal business of an associated person's employment. Not recorded on books or records. Is a violation of conduct rules. FINRA Rule 3050 - CORRECT ANSWER Transactions for or by associated people. Must have duplicate copies of confirms, statements, and other documentation. Must notify employer in writing prior to certain transactions. FINRA Rule 3060 - CORRECT ANSWER Penalty for bribing a foreign official is $100,000 fine & 5 yrs or both for a person, $2mil for a business. FINRA Rule 3070 - CORRECT ANSWER Must promptly report suspension, barring, fines over $2500, named as a defendant or respondent, associating with someone subject to statutory disqualification. Information required in a prospectus - CORRECT ANSWER Investment objectives, policies, and restrictions, sales loads & fees, expense table, breakpoints, rights of accumulations, LOI's, exchange privileges, per share income & capital charges, methods of sale, methods of redemption, investment & withdrawal plans, financial statments SEC Rule 134 - CORRECT ANSWER Tombstone ads. Not considered advertising Front End Load Plan - CORRECT ANSWER 50% of first year premium applied to sales charge. Refund sales charge AND NAV minus 15% if canceled within 18 months SEP IRA - CORRECT ANSWER Employer contributions ONLY. Don't need to contribute same amount each year, but need to be based on the same percentage. SIMPLE - CORRECT ANSWER For companies with less than 100 employees with at least $5000 in compensation. Immediately 100% vested. Employees can contribute. Keogh/HR-10 Plan - CORRECT ANSWER Must be self employed or partner who owns 10% of the business. Can't withdraw before 59.5, Employer must match percentage of employee contributions. 401k Thrift/Bonus Plan - CORRECT ANSWER Employer contributes a certain amount or percentage for each dollar contributed by the employee. Switching - CORRECT ANSWER Asset movement among fund families without a legitimate reason. Applies to mutal funds. Churning - CORRECT ANSWER Trades that are excessive in size or frequency. Reg A - CORRECT ANSWER Small issue exemption. Less than $5 mil over 12 month period Reg D - CORRECT ANSWER Private placement exemption These are not eligible for breakpoints - CORRECT ANSWER Investment clubs, co- ops, two unrelated people in a joint account Lending or borrowing money from customers - CORRECT ANSWER Inappropriate UNLESS client is a broker-dealer or engaged in the lending business How soon must insiders report trades? - CORRECT ANSWER 2 business days How soon must insiders notify the SEC of that change? - CORRECT ANSWER 10 days How a distribution effects NAV - CORRECT ANSWER It will decrease by the amount of the dividend and the customer will incur a tax liability FINRA Rule 2510 - CORRECT ANSWER Discretionary accounts. Can be full or limited. The customer must sign a POA to kept on file. SIPC Coverage - CORRECT ANSWER $500,000 for each customer, $100,000 in cash. Cash & margin accounts are considered 1 customer, & therefore only covered up to $500,000. A joint account & cash account would be considered 2 customers and covered up to $1,000,000. Cost basis - CORRECT ANSWER the original purchase price of a security inclusive of sales charge. Ads for investment company shares must be filed when? - CORRECT ANSWER 10 business days AFTER initial use Rule 2210 with regard to completion of a securites transaction - CORRECT ANSWER Must disclose if they were acting as broker or dealer Lowest annuity cost to the investor - CORRECT ANSWER Life annuity Capital gains distributions - CORRECT ANSWER Almost always long term regardless of how long the investor has held the funds Regulated Investment Company - CORRECT ANSWER Distributes at least 90% of net investment income back to shareholders. An investment advisor is exempt from state registration under what circumstance? - CORRECT ANSWER They have no place of business in that state and their only clients are institutional investors Who is responsible for review & reporting of securities transactions & correspondence between reps & the public? - CORRECT ANSWER The supervising principal What isn't covered by a 12b-1 fee? - CORRECT ANSWER Management fees Face amount certificates have a maturity of at least how long? - CORRECT ANSWER 24 months