SIE Exam
1) FINRA investor edu/2) expungement - ANS-1) FINRA investor edu rule requires firms to offer
clients with following information on annual basis
- FINRA broker take a look at hotline #
- FINRA website deal with
- assertion that an investor brochure is available which describes broking test
2) expungement = procedure through which consumer dispute information is eliminated from
RSS CRD (crucial registration depository) document.
- claim have to be factually impossible or misguided
- RR could not were worried inside the investment associated sales violation
- declare, allegation, data is fake
1/three - marketplace order - ANS-patron is ready and wishes to buy/promote, consumer
specifies security and size of order simplest, order is finished straight away
-fill=assure execution
-order finished right now
**time/charge isn't guaranteed
1/7 prohibiting buying and selling practices - market rumors - ANS-spreading fake/deceptive
data to influence price of stock/bond (ex) short stock then spread rumors to try to get fee to
head down
1035 exchange - annuity (investor need to be informed about RR commission and possible give
up/redemption fees) - ANS-tax avoidance device, permits you to swap from one annuity to every
other with out a tax bc you had been no longer happy with the annuity
-RR may advocate this in case you're unhappy with annuuity you may do that to change one
settlement for every other=tax loose like rolling over IRA, and many others.
-FINRA studies located that regularly instances those exchanges had no benefit economically
for the owner... However RR receives more commission from this...
-one catch is that there may be a surrender rate if supplied too soon in the contract (you may
should pay this for your way out)
**investor should be knowledgeable of all of the catches
-reason of RR (fee)
-viable give up fees
12b-1 fee (and trailing commisions) - ANS-annual rate levied in opposition to the funds assets
-covers marketing prices of underwriter and from time to time they'll percentage this with dealer
dealer and might including trailing commissions = considering most effective received once
consistent with 12 months, they can be a test from earlier income. This courting can last into
retirment for a few RR, as long as it's miles ok with enterprise contract, can nevertheless
acquire a number of this charge, can most effective accumulate commissions on current
property of present clients= simplest can collect on current clients property at time of retirment
,2 forms of company retirement - ANS-1) 401K
2) profit sharing plan
1) personnel can elect in the event that they need to make contributions themselves, this
amount is pretax=zero cost foundation=taxed upon withdrawal. Contributions are problem to
max annual quantity, employers may match contributions however are NOT required to achieve
this. Matching can be based totally on a earnings sharing plan
2) contributions aren't mandatory, but discretionary decided on by using board of administrators.
Contributions are problem to max annual quantities, **allocation of contribution to employees is
based on a pre determined system
-an employer-extensive application that distributes reimbursement based on a few hooked up
method designed around a enterprise's profitability
2 varieties of exercising of an choice - ANS-1) american fashion= option can be exercised at
any time up until expiration (suppose people can do whatever they want). Proper of all equities
on us exchanges
2) ecu fashion=can best be exercised on day of exp. Index/overseas foreign money alternatives
may be this type
2/3 - limit order - ANS-in which consumer simplest desires to shop for/sell @ particular fee or
better
-consumer specifies protection, length, rate
-order is simplest executed if limit charge can be met
-restriction=buy or sell that won't be performed
*buy restrict=buy at that price of decrease
*sell restriction=promote at that fee or better
ex) ABC trading at 30.75, she enters limit order to shop for one thousand at 30. If it growing you
pass over the mark/it isn't always performed. The rate can also always get better but investor
set a threshold=profit not guaranteed
ex) sell limit order: ABC buying and selling at 29.4 goes to sell them consumer places sell
restrict at 30. Risk=inventory ought to go as much as 45 or higher next week so earnings is not
guaranteed
2/7 prohibiting trading practices - the front walking - ANS-RR executes trades for proprietary
accts (the ones which they have discretion) in advance of clients BLOCK ORDER = tempting to
buy in your personal account previous to known customer block order
block order=An order to sell or buy in a quantity this is large relative to the liquidity in most
cases to be had from dealers within the security or in other markets=has the capacity to
transport the marketplace
issues while:
-buy or sell before the customer
- buy derivatives (name options, and many others) prior to consumer order execution
3 dif rules, 2 FINRA and 1 SEC
,1) FINRA guidelines require sure information
2) FINRA regulations require you ask for sure data, may not be required for all
debts/clients/buying and selling however must record you requested consumer/if they do not
want
3) SEC, if there may be a SSN you must have this info on report - ANS-
three motives why corp would purchase returned their own stock - ANS-1) so there are much
less remarkable stocks
2) growth the marketplace fee of the security (rule 10b has policies round this)
three) purchase returned to provide to personnel within the shape of inventory choice plans
three levels of cash laundering (placement, layering, integration) - ANS-1) placement=unlawful
cash is located in b/d enterprise
2) layering = series of transactions are done which can be supposed to avoid detection
3) integration=getting proceeds from previous transactions that are placed into move of
commerce (try and cover finances)
3/three forestall order (prevent and prevent restrict orders are on separate card) -
ANS--nicknamed a prevent loss order bc you prevent if from going too far within the direction
you don't want it to move
may be used to restrict a loss (if you lengthy the placement) or guard a gain (if you brief)
-does not assure particular fee
-2 kinds (buy prevent and sell stop)
-in case you long inventory=you are bullish, you want market to move up. You worry that
inventory could fall in cost so that you need to restriction downside danger so you enter prevent
order under current market value bc if it is going to head down you need to prevent that loss)
-in case you are brief the stock=you hope market goes down=fear that inventory may
additionally boom so you enter purchase order above market price which is to restrict the upside
chance)
three/7 prohibiting trading practices - advertising and marketing the open/near - ANS-affecting
trades close to beginning/near of buying and selling in attempt to influence closing charge
upward or downward
ex) tempting for positions that exchange at close.... Could be doing a number of orders right
before marketplace near or the usage of this to save you a margin call = attempt to run up
ultimate charge of stock
four/7 prohibiting buying and selling practices - churning - ANS-immoderate trading for cause of
generating additional charges/commissions (can be tempting particularly in discretionary debts)
- no strict definitions so tough to catch (study frequency/investor overall strategy)
-first-rate of inventory is beside the point, can be completed with precise and terrible shares
five/7 prohibited buying and selling practices - interpositioning - ANS-while you insert any other
b/d among purchaser and great market
ex) clients desires to buy ABC, which may be sold out of that firms stock = they would act as the
most important or you can buy from every other company appearing as agent and rate
purchaser commission.... Usually that is prohibited if unfavorable to the customer however if you
could display benefits to patron =not strictly prohibited
, 529 capable plan= acheiving a higher life experience - ANS-if you are disabled and receving
social security incapacity, medicaid, or private coverage payouts, this allows you to retain
receiving medicare payments
-max contribution is 15K according to year NO front loading
-incapacity bills keep so long as account cost would not exceed 100K
-distribution are tax loose if used to pay qualifying costs and grows tax deferred
529 direct sold vs 529 advisor bought - ANS-direct offered: includes no salesclerk, can do
online, bought at once thru 529 financial savings plan internet site
marketing consultant offered: bought through broking supplier that has promoting agreement
with primary distributor of 529 plan
529 plans (muni fund secruities) - ANS-investor set aside $ and pick between one-of-a-kind
mutual funds, grow tax deferred and any profits grow tax deferred AND may be taken out tax
free if the money is used for the right functions, does not restriction schools you may go to like
the nation lessons plan.
-funded with after tax bucks
-most buyers select to fund one from very own nation.... If you purchase plan within the country
in which you don't stay, you will be challenge to kingdom tax, if you got in your very own state
you are exempt at state and fed degree...
- cash utilized in one kingdom plan may be used in another nation
-max contribution=15K in line with 12 months to avoid gift tax (this is doubled for married
couples), OR you could front load five years of contributions so 75K up front or 150K in step
with married couple (for those who haen't contributed enough but or are simply starting account
adn kid is of age)
-withdrawals which are certified (training, books, room/board) can come out tax unfastened. For
grades ok-12 there's a max withdrawal of 10K
**** 529 plans stay belongings of donor not like an UGMA or UMA which end up assets of infant
whilst they may be of age... So with this plan you may use one children plan on some other kid if
one got full scholarship, etc....
6/7 prohibited buying and selling practices - trading ahead of purchaser order - ANS--happens
whilst after accepting client order a dealer executes an order for the same security on the equal
side of the marketplace for its OWN account
-ALWAYS must fill known purchaser order first
-exception exists if done by dif. Branch @ identical company... Bc you wouldnt have information
of this bc records limitations exist
7/7 prohibited trading practices - quoting a protection in more than one mediums - ANS-should
not show costs on same safety in multiple markets, only accredited if quotes are same price
account registrations 1/6 - individual - ANS--account is opened for one person, they're most
effective person who can offer instructions unless 1/3 birthday party auth/POA has been granted
-numbered or nominee bills are accepted = operations is aware of all the patron info however
internally the account is related to a range of/code as to preserve their data personal to different
employees
-CIP=patron identification application requires companies to keep information of beneficial
proprietors (so some people, those in ops need to recognise all of this character's information)
