Series 79 - Solomon - Section 4 EXAM Questions || with
100% Errorless Answers.
Rule 10b-18 correct answers Rule 10b-18 is a safe harbor that protects an issuer and its affiliated
purchasers from liability for manipulation. In order to benefit from a Rule 10b-18 safe harbor, a
company and its affiliated purchasers cannot bid at or settle at a purchase price that exceeds the
highest current independent bid or the price of the last transaction (LT) in the security, whichever
is higher. Additional rules must be followed regarding the manner, timing, and volume of the
repurchases.
Mark, a customer, knows that his case is solid, and that anyone in their right mind would side
with him when he brings his claim to arbitration. Still, he can't help but feel some apprehension
at the possibility that a single person could hold ultimate authority over whether his claim is
valid. You point out to him that because his claim is large enough, there will be three arbitrators
on his case, unless he and the opposing party agree otherwise in writing. Mark looks relieved to
hear this, and returns to making sure that he is prepared for the hearings. Mark's claim is for over
_____.
A. $100,000
B. $25,000
C. $50,000
D. $10,000 correct answers A. 100K
For claims involving a customer, the majority of arbitrators must be public arbitrators. A panel
will consist of one arbitrator for claims of $50,000 or less. Claims in excess of $50,000, but no
more than $100,000, have one arbitrator unless the parties agree in writing to three. Claims in
excess of $100,000 have three arbitrators unless the parties agree in writing to one. If the
customer is the claimant, the customer may demand that a panel of three arbitrators be comprised
entirely of public arbitrators, instead of just a simple majority.
How long can a complaint be filed on a cancelled/revoked registered rep? correct answers
According to the FINRA by-laws, a complaint may be filed against a registered representative
after his license is cancelled or revoked. The complaint must be filed within two years of
cancellation or revocation.
You are underwriting an offering for Company XYZ. During due diligence, you discover that the
company may be involved in illegal activity. You file a Suspicious Activity Report (SAR). When
the client asks you about delays, you tell the client:
I. You filed a suspicious activity report with the U.S. Department of Treasury
II. You discovered that they may be operating illegally and you are waiting to hear from the
Department of Treasury about whether there will be delays
III. You tell them nothing about the SAR because that is against the law
A. II and III
B. I and II
C. I only
,D. III only correct answers III. You cannot disclose that an SAR has been filed against a client
Suspicious Activity Report (SAR) correct answers It is against the law to tell a client about a
Suspicious Activity Report (SAR) that has been filed about them. It is also against the law to tip
off a client that you have filed a SAR as would be the case in statement II. A person who does
disclose to a client that an SAR has been filed about them is subject to stiff penalties such as high
fines and long prison sentences.
NASD Rule 3010 correct answers
For representatives whose telemarketing activities are subject to the tape-recording rule, when
must the reports reviewing those taped conversations be submitted to FINRA?
A. within 30 days of the end of each quarter
B. within 30 days of the end of each month
C. annually
D. twice a year correct answers A. Within 30 days of the end of each quarter.
Monitoring reports must be submitted within 30 days of the end of each quarter.
Under NYSE Rule 351(e) - Reports of Proprietary and Employee Trading Reviews, a member
organization must file statements, in writing, to the NYSE about reviews done concerning
proprietary or employee trades. How often must those statements be filed?
A. semi-annually
B. quarterly
C. annually
D. monthly correct answers B. Quarterly
Member organizations must submit quarterly statements regarding proprietary and employee
trading reviews.
Which of the following must be reported to FINRA within 30 calendar days of its occurrence?
A. Suspension of an agent's registration
B. Discovery that a firm is subject to the taping rule
C. First use of a piece of retail communication regarding registered CMOs
D. Change in ownership or control of a member correct answers A. Suspension of an agent's
registration
A firm must notify FINRA within 30 calendar days of when a representative is suspended or has
committed a violation. A member must file an application with FINRA 30 days in advance of a
change in ownership or control. There is no specific reporting requirement for discovery that a
firm is subject to the taping rule, though the firm must put appropriate policies into place within
60 days of discovery, and must report on its supervision of telemarketing activities on the 30th
day of the month following the end of each calendar quarter. Certain retail communications,
including retail communications regarding registered collateralized mortgage obligations
(CMOs), must be filed with FINRA within 10 business days of first use.
, Rule 10b5-2 correct answers Rule 10b5-2 of the Securities Exchange Act covers the Duties of
Trust or Confidence in Misappropriation Insider Trading Cases. The duty of trust or confidence
exists in several cases. One case is when one person agrees to keep information confidential.
Another case is when, based on history, the person should know to keep information
confidential. A duty of confidence is not expected when relatives have no way of knowing the
information shared was confidential.
FINRA rule 3270 correct answers All registered persons of FINRA member firms must provide
prior written notice to their firm if they operate as "an employee, independent contractor, sole
proprietor, officer, director or partner of another person, or be compensated, or have the
reasonable expectation of compensation, from any other person as a result of any business
activity outside the scope of the relationship with his or her member firm." In turn, the firm must
evaluate the notice and either approve or reject the proposal. The employee may not participate
in the outside business activity unless approved by the firm. Passive investments and private
securities transactions are exempted from this requirement.
Which of the following are not true of the requirements of the Bank Secrecy Act?
A. A CTR must be filled out for any cash transactions in customer accounts that exceed a total
$10,000 in a single day
B. Cash purchases between $3,000 and $10,000 must be recorded in an in-house monetary
instrument log (MIL)
C. Institutions must file a SAR no later than 30 days after discovery of the suspicious activity
D. Anti-money laundering documents must be kept for a minimum of three years. correct
answers D.
Upon detecting suspicious activity, institutions must file a suspicious activity report (SAR) no
later than 30 days after discovery of the suspicious activity. Insitutions must fill out a currency
transaction report (CTR) for any cash transactions in customer accounts that exceed a total
$10,000 in a single day. Cash purchases between $3,000 and $10,000 must be recorded in an in-
house monetary instrument log (MIL). Anti-money laundering documents must be kept for a
minimum of five years.
Market manipulation correct answers Market manipulation can take on many forms, including
entering into a trade without any true transfer of ownership, creating the illusion of heightened
market activity, entering transactions intended solely to drive the price of a security up or down
in order to influence other investors' behavior ("painting the tape"), and using false information
to open and trade in an account. In this example, Kelly is asking Rory to "paint the tape" so he
can obtain a better price for his stock. Rory must refuse to act on Kelly's request, and should
point out to him that this would constitute market manipulation.
OSJ & Branch Inspection Dates correct answers Members must conduct inspections at least
annually for OSJs (offices of supervisory jurisdiction) and branch offices that have supervisory
responsibility over one or more non-branch offices. Branch offices that don't supervise any non-
branch offices must be inspected at least once every three years.
