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17 Cards in this Set
- Front
- Back
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Written Supervisory Procedures Manual
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Must cover scope and nature of a firm's business activities and its methods of operation. A record of names of supervisory personnel adn dates on which they took the job must be maintained for three years, and be easily accessible for two
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Office of Supervisory Jurisdiction (OSJ)
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A firm must appoint a principal to supervise activities of any OSJ location. Any OSJ is basically an office where market making/order execution occurs (example of non-OSJ may be someone working from home) |
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Prohibited and Fraudulent Practices of Firm
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Forgery Guarantees Parking (falsely keeping registriation active) Failure to Follow Customer Instructions Use of Stockholder Information Failure to Protect Confidentiality Undue Influence Transactions Executed at Artificial Levels Commingling of Funds Misrepresentationof FINRA or SIPC Membership |
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The 5% Markup Policy
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Most markups, markdowns and commissions should be set to 5%. Certain circumstances could change the 5% number since it is just a guideline
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Soft Dollar Compensation
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Arrangements can be set up between B-D's and Investment Advisers if the IA uses the B-D's research, for instance
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Different Types of Communication
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Correspondence: communication sent to one person Institutional Communications: Distributed only to institutional investors Retail Communications: Distributed to more than 25 retail investors in a 30 day period |
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Difference between Retail Communication and Correspondence/Institutional Communication
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Only retail communication must be approved by a principal prior to distribution. These documents must also then be sent to FINRA either 10 days prior to use or within 10 business days of use
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Telecommunications
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Clients on a Do Not call List cannot be contacted unless they ahve given prior written consent. If a person rebuffs a firm's call that must be communicated to a principal |
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Penny Stock Regulations
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SEC Rules 16g-1 through 15g-6 require customers get documents describing risks of penny stock, current quote for security, compensation B-D would receive, compensation RR would receive. Established penny stock customers do not need to go through all the approval steps for penny stock accounts, however.
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Regulation AC
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A Research Analyst must provide statement saying that views in his research does not include: None of his compensation (or just part), is, was, or will be related to his recommendations or views that are expressed in research report If the analyst says "part", he must provide source, amount and purpose of comp |
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Good Delivery
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Must ensure CUSIP number is correct Customer who sells security is required to sign certificate Certificate endorsed with proper full name Units of Delivery must be in round lots of 100, provided order is in 100 share units (like 500) Partial Deliveries can occur if it leaves round lots remaining (deliver 300 of 500 shares) |
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FINRA's Code of Procedure |
Describes disciplinary process used in the event a member firm or any associated person violate FINRA rules. Used by FINRA versus B-D or RR
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Code of Procedure Process |
A complaint is issued, respondent receives two notices to respond (25 and then 14 days), hearing can be requested, hearing panel can impose sanctions, other than being barred or expelled sanctions take effect 30 days after respondent receives notice. Respondent can file an appeal with Natioanl Ajudicatory Council and they have the power to reverse decision, from there can appeal to SEC then Federal Court
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Code of Arbitration
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Requries arbitration be used between RRs, B-Ds, customers. Arbitration is binding and final, parties are waiving their right to seek remedies in court, arbitrator's finding is not required to include factual findings
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Simplified Arbitration
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Used if amount in dispute does not exceed $50,000. In Simplified Customer Arbitration one public arbitrator decides case based on evidence/arguments unless public customer demands/consent to hearing. In simp industry arb, case is decided without a hearing unless it is demanded by one party involved
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Mediation
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A negotiation process used that is less formal than arbitration. Parties must be willing to see strengths of position on either side and they can withdraw from process, where they cannot in arbitration. Settlement is confidential where arb decision is public
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Business Continuity Plan
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B-D must have a written business continuity plan in place in case of emergency or significant business distruption. Must provide to FINRA two emergency contact persons, and does not need to file annually with FINRA but have it onhand incase FINRA asks
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