A registered representative is preparing a PowerPoint slide presentation, to be delivered in a live seminar, for a group of invited institutional clients. To use the slides, they may have to be
A)
reviewed by a principal of the broker-dealer.
B)
submitted to the SEC for review and approval.
C)...
Series 7 Unit 19 || with Complete Solutions.
A registered representative is preparing a PowerPoint slide presentation, to be delivered in a live
seminar, for a group of invited institutional clients. To use the slides, they may have to be
A)
reviewed by a principal of the broker-dealer.
B)
submitted to the SEC for review and approval.
C)
submitted to both FINRA and the SEC for preuse approval.
D)
approved by FINRA in writing. correct answers A
Communications material that is intended for use with institutional customers only need be
supervised and reviewed by a principal of the member firm. Alternatively, if the member's
procedures do not require review of institutional communications, they must include a provision
for the education and training of associated persons so that they will understand the firm's
requirements. Though FINRA can request spot checks of any material used to communicate with
the public, submission of institutional communications to FINRA or the SEC for review or
approval is not required.
LO 19.c
A registered representative of a FINRA member firm uses her personal smartphone to send a
client a text message about a security in the client's portfolio. This practice is
A)
not permitted under FINRA rules; all electronic communications must be on company-owned
devices.
B)
considered a retail communication and must have principal approval.
C)
considered an electronic communication and must be reviewed by a principal.
D)
a personal message and does not come under the FINRA rules on communications with the
public.
Explanation correct answers C
Although many member firms do not permit use of personal devices, that is a firm's decision, not
a FINRA rule. When permitted, a single message like this is considered correspondence
delivered electronically. As with all correspondence, review by a principal is required. This
review may be on a pre- or post-use basis. A text message sent to more than 25 persons within a
30-day period becomes retail communication.
The ABC Insurance Company is advertising its variable annuity product as "ABC Lifetime
Income—income generated from mutual fund returns." This advertisement is
A)
prohibited because it doesn't reference an annuity.
B)
permitted as long as there's no guarantee.
, C)
permitted.
D)
prohibited because it implies returns from mutual funds. correct answers B
Variable contracts or their underlying accounts cannot be advertised as mutual funds. Proprietary
terms can be used instead of words such as "annuity."
Lorne Walters is a registered representative with Pecuniary Profits Securities, PPS, a FINRA
member firm. Walters has decided to conduct virtual meetings using a system called Xoom.
Because he has never used the system before, Walters decides to make a trial run of his securities
presentation to six family members who are PPS customers. All of these family members are
accredited investors. Which of the following choices best describes this situation?
A)
Prior approval of PPS may be required, but it is not mandated by FINRA for this public
appearance.
B)
Walters may not recommend securities during the presentation, unless a principal of PPS
provides prior approval.
C)
This constitutes an institutional communication to accredited investors and does not require
preapproval by a principal of the firm.
D)
The virtual meeting may not be archived for later viewing. correct answers A
The virtual meeting is defined as a public appearance. Prior approval of a broker-dealer is not
mandated by FINRA but may be required by the broker-dealer. An associated person of a broker-
dealer may make a recommendation of a security in a public appearance but must have a
reasonable basis for the recommendation. Individual accredited investors are not institutional
investors unless they have assets of at least $50 million, and there is nothing in the question to
indicate that is the case with these customers. If such electronic presentations are recorded, the
recording must be preserved for a minimum of three years.
All of the following may be included in an advertisement for a collateralized mortgage obligation
(CMO) issue except
A)
a generic description of the CMO tranche.
B)
a disclosure of the CMO's coupon rate and final maturity date.
C)
a disclosure that payment assumptions may or may not be met.
D)
a statement that the CMO is guaranteed by the U.S. government. correct answers D
The U.S. government does not issue or back CMOs. It is also misleading to state or imply that a
CMO's anticipated yield or average life is guaranteed. CMOs must include the coupon rate and
the final maturity date, a generic description of the CMO tranche, and disclosure that payment
assumptions may or may not be met.
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