Series 24

Front 1

Discretionary?

Back 1

Did I tell you how many shares? (How much to buy)

Did I tell you to buy/sell?

Did I tell you what stock?

If all of your answers were yes, then it is not discretionary

Front 2

How often are discretionary accounts to be reviewed?

Back 2

Frequently

Front 3

DPP Roll-up Compensation

Back 3

Pay for this is 2% of the total transaction and you get paid whether 9 not the roll-up is approved.

Front 4

What holdings will not get transferred via ACAT?

Back 4

Option positions expiring within seven business days of validation are not transferred.

Front 5

Regulation S-P

Back 5

Firms must adopt policies and procedures to address the protection of nonpublic personal information.

Front 6

Formula to calculate equity in a Combined Account

Back 6

LMV-DR+CR-SMV=EQ

Front 7

APO

Back 7

Additional Public Offering

Front 8

Rule 415 - Shelf Offering

Back 8

Typically 2 years.

For well known seasoned issuers it is 3 years

Front 9

WKSIs

Back 9

Well - known seasoned issuers

At least $700 million in public common equity float or

$1 billion in debt issued in past 3 years

Front 10

FPI

Back 10

Foreign Private Issuer

Side note: they file a 20-F form to have a new issue in the U.S.

Front 11

Prospectus delivery requirement for an IPO

Back 11

As long as the securities have not been sold previously under a registration statement it is 90 days.

Front 12

25 day prospectus delivery

Back 12

- Never before been registered

- listed on an exchange or authorized for inclusion on an inter-dealer quotation system (IDQS) such as the OTCBB

Front 13

40 day prospectus delivery

Back 13

Securities sold previously under a registration statement.

Front 14

Zero days prospectus delivery

Back 14

Securities sold by issuer subject to reporting requirement of the 1934 Securities Exchange Act

Front 15

FINRA Rule 5130

Back 15

Prohibits member firms from selling a new issue to any account which restricted persons are beneficial owners.

Front 16

Filed Form 144 is effective for how long?

Back 16

Effective for 90 days

Front 17

Trading on form 144

Back 17

1 - greater of 1% outstanding

4- average weekly trading volume of last 4 weeks

4- can be done up to 4 times a year (good for 90 days)

Front 18

Qualified Institutional Buyer (QIB)

Back 18

Allows non registered foreign and domestic securities to be sold to certain institutional investors in U.S.

Most be a minimum of $100 million in securities

Front 19

Members may not solicit buyers of 144 stock unless

Back 19

A. Customer has expressed interest in previous 10 business days.

B. Member had expressed interest in previous 60 calendar days

Front 20

Form 3

Back 20

Corporate insiders are required to file information on changes to their holdings with the SEC.

Initial report within 10 calendar days

Front 21

Form 4

Back 21

Report change in holdings within 2 business days

- officers, directors, or more than 10% shareholders

Front 22

Form 13-D

Back 22

When an investor, investor group, or other entity acquires a 5% ore more interest in an issuer

Front 23

Form 13-G

Back 23

When an investment company acquires a 5% or more interest in an issuer

Front 24

13-D and 13-G report to who?

Back 24

SEC, Issuer and market where security trades

Front 25

What forms does a reporting company file?

Back 25

10-K, 10-Q, and 8-K or 6-K

Front 26

10-K

Back 26

Annually audited report filed by a publicly traded company withing 90 days of year end.

Front 27

10-Q

Back 27

Unaudited quarterly report filed by publicly traded companies withing 45 days of each quarter

Front 28

8-K

Back 28

Filed by a publicly traded company within 4 days of big news taking place.

Front 29

6-K

Back 29

Filed by a Foreign Private Issue (FPI) within 4 days of big news taking place.

Front 30

Rule 10b-18

Back 30

Pertains to an issuer buying it's own securities

Front 31

Rule 10b-18 Details

Back 31

1) One market maker or DMM on any given day

2) Transactions on any day cannot exceed 25% of Average Daily Trading Volume (ADTV)

3) Block purchases do not count against daily purchase limit (once each week)

Front 32

Rule 10b-18 opening/closing trading

Back 32

Cannot affect opening of closing of security.

Issuer can't be first transaction of the day

Issuer can't trade during last half hour

Front 33

Rule 10b-18 pricing

Back 33

Price no higher than highest independent bid or last sale, whichever is higher

Front 34

Rule 10b-13

Back 34

Tender offers-

Once announced, cannot buy shares in open market - non equivalent purchases ok

Front 35

Rule 10b-13 details

Back 35

Tender offer must remain open for 20 business days additionally it must remain open 10 business days from any change.

Front 36

10b-13 Target Company

Back 36

Has 10 business days to provide a statement to shareholders.

No short tendering

Front 37

State Registration (Blue Sky)

Back 37

Types of Registration:

Coordination (most common)

Notice Filing

Qualification

Front 38

Offer of Rescission

Back 38

(Blue Sky)

For unsuitable/illegal sales

Offers must be accepted or rejected within 30 days

Front 39

Insider Trading Penalties

(Controlled person)

Back 39

Civil penalty is 3 times the profit made or loss avoided on the person who committed the violation

Front 40

Insider Trading

(Controlling Person)

Back 40

Civil penalty is greater of $1 million or 3 times the profit made or losses avoided.

When the controlling person knew that the controlled person was likely to violate the law and did nothing to prevent it.

Front 41

Insider Trading

(Criminal penalties)

Back 41

Imprisonment for 20 years and fines up to $5 million for natural persons.

$25 million for other persons (business entities)

Front 42

Insider Trading

(Bounty)

Back 42

Up to 10% of civil penalty

Front 43

NYSE Listing Requirements

Back 43

1) Minimum number of shares

2) Minimum market value

*3) No minimum Earnings Per Share (EPS)

4) Broad National Interest

Front 44

Nasdaq, BATS, Direct Edge

Back 44

Listing Requirements: $4 initial

Front 45

NYSE Regulated by:

Back 45

FINRA and NYSE Regulation, Inc.

Front 46

OTCBB regulated by:

Back 46

FINRA

Front 47

Rule 127 block

Back 47

10,000 shares/$200,000 ore more

Front 48

Inside Market

Back 48

Highest Bid

Lowest Ask

Front 49

Market Maker (dealer/principal)

Back 49

Sells net (with markup)

Front 50

Non - market maker (broker/agency)

Back 50

Firms buys at inside Market and sells at that price with a commission.

Firm buys at inside Market and sells with a markup.

- riskless principal transaction (essentially a commission is charged)

Front 51

Market Maker obligations with short positions

Back 51

Twice monthly reports

Front 52

Withdrawals from NASDAQ - excused

Back 52

Must apply for and receive permission and is up to 5 business days.

Acceptable reasons

1. Personnel

2. Equipment

3. Inside information

4. Involuntary failure to maintain clearing agreement

Front 53

Withdrawals from NASDAQ

Back 53

Voluntary termination

1. Withdraw quotes from NASDAQ or the ADF

2. Cannot re register for 20 business days.

Front 54

Withdrawals from NASDAQ ( Involuntary termination?

Back 54

Failure to abide by the rules

Front 55

ACES

Back 55

Allows order entry firms access to a marker makers internal order book for order placement and execution

Front 56

Volume Weighted Average Price (VWAP) Orders

Back 56

Calculate the total cost of all shares. Divide that result by the total number of shares.

Front 57

Form 211

Back 57

File with FINRA to register as a non - nasdaq market maker

Must be filed 3 business days prior to entering quotes on the OTCBB or OTC Pink

Front 58

Piggybacking

Back 58

(Form 211 not required)

Allowed if meeting the continuous quote rule.

- existing market maker has published quotes on at least 12 business days out of the last 30 calendar days.

- no more than 4 consecutive business days without a quote.

Front 59

5% markup in an active market

Back 59

Markup percentage is not based on your markup to what you purchased. It is based on the inside market.

Inside Market: 9.95-10.00

Black securities sells to its customers at 10.20 net.

Amount of markup is .20 points; % markup (.20) ÷ (10) = 2%

Front 60

Limit order

Back 60

Order to buy or sell a security at a stated price.

Front 61

NASDAQ order display

Back 61

Member must display customer bid or offer and size if better than briker/dealer.

A Nasdaq market maker has the following quote?

21.25-21.45, 10 x10

Upon receiving the following customer order:

Buy Limit 300 at 21.25

The market maker Must update the its quote to:

21.25-21.45 13 X 10

Front 62

Nasdaq trading halt T1

Back 62

News pending

Front 63

Nasdaq trading halt T2

Back 63

News released

Front 64

Nasdaq trading halt T3

Back 64

Two different times displayed

- first is the time market markets can begin quoting

- second is the time market makers can begin trading

Front 65

Regulation SHO

Back 65

1. Mandates a locate requirement for short sales in all equities.

2. Mandates closeout of short sales not resulting in delivery of market maker has fails in a threshold security for 13 consecutive settlement days.

Front 66

Reclamation

Back 66

Member inadvertently accepts delivery of securities not in good deliverable form.

- standard Time frame is 15 days

Front 67

DERP

Back 67

Declaration date, ex-date, Record date, payment date

Front 68

Dividends dates

Back 68

All dates are set by the issuer except the ex-date which is set by the SRO

Front 69

SEC Rule 10b-17

Back 69

Notification to exchange or FINRA by the issuer at least 10 days in advance of the record date.

Front 70

SEC Rule 15c3-1

Back 70

Minimum net capital requirements

Front 71

SEC Rule 15c3-1 Self-clearing firms (carrying firms)

Back 71

1. Holds customer funds and securities

2. Participates in firm commitment underwriting

3. Minimum $250,000 requirement

4. If acting as a prime broker - $1.5 million

5. If acting as executing broker - $1.0 million

Front 72

SEC Rule 15c3-1 Fully Disclosed firms (introducing firms)

Back 72

1. Cannot hold customer funds or securities

2. Introduces accounts to clearing firm

3. Permitted occasional trades in its investment account

-- if >10 trades/year, minimum is $100,000

Front 73

Rule 17A-11

Back 73

Notify SEC and FINRA of violations to the net capital rule which is done electronically.

Front 74

Rule 17A-11 Net capital falls below minimum requirements

Back 74

Immediate notice

Front 75

Rule 17A-11 AI-to-NC ratio> 15:1 (8:1 first year)

Back 75

Immediate notice

Front 76

Rule 17A-11 Debt-Equity ratio exceeds 70% for a period of more than 90 days

Back 76

Immediate notice

Front 77

Rule 17A-11 Books and records are not current

Back 77

Immediate notification and followup within 48 hours of the notice to advise how you will fix it.

Front 78

Rule 17A-11 Material inadequacies in accounting system

Back 78

Notice within 24 hrs

Follow up within 48 hrs how you will fix it

Front 79

Rule 17A-11 Early Warning

Back 79

1. Capital falls below 120% of minimum

2. AI-to-NC ratio > 12:1

3. Notification within 24hrs

Front 80

15c3-3

Back 80

Customer protection rule

Front 81

15c3-3 Good Control Locations

Back 81

1. Commercial banks

2. DTC

3. Clearing accounts at other broker/dealers

4. Foreign custodian banks

Front 82

15c3-3 Not Good Control Locations

Back 82

1. Savings and loans (S&L's)

2. Credit Unions

3. Foreign BDs

Front 83

15c3-3 Reserve Computation

Back 83

Performed weekly (after close on Friday)

1. Determination is made as to:

a. Monies owed to broker/dealer by customers - debit

b. Monies owed by broker/dealer to customers - credits

Front 84

15c3-3 Reserve Account - if credits exceed debits

Back 84

Difference must be on deposit in special reserve account.

1. Withing 1 hour after banks open on second business day following computation

2. Acceptable deposits

a. Cash or qualified securities (government)

Front 85

15c3-3 Reserve Accounts - failure to make required deposit

Back 85

Immediate electronic notice

Front 86

Securities Information Center (SIC)

Back 86

Computer bank designated by SEC to deal with lost or stolen securities.

Front 87

SIC SEC 17F-1 if securities are missing and no criminal action suspected

Back 87

2 business days to locate

3rd business day report to SIC and transfer agent.

If recovered : 1 day to report

Front 88

SIC SEC 17F-1 if securities are missing and criminal action is suspected

Back 88

Notify FBI immediately

1 business day to report to SIC and Transfer agent

If recovered: 1 day to

Front 89

Fidelity Bonding for firms over $250,000

Back 89

Front 90

Recordkeeping and retention

(SEC 17A-3, 17A-4)

Lifetime records

Back 90

Front 91

Recordkeeping and retention (SEC 17A-3, 17A-4)

Six-year records

Back 91

1. Blotters/Daybook/Diary/Journal

2. General Ledger

3. Stock record

4. Customer ledgers (statements)

5. Customer account records

6. Principal designation record

Front 92

Recordkeeping and retention (SEC 17A-3, 17A-4)

3-years

Back 92

Front 93

Recordkeeping and retention (SEC 17A-3, 17A-4)

4-year records

Back 93

Customer written complaints

Front 94

Recordkeeping and retention (SEC 17A-3, 17A-4)

Electronic records

Back 94

Must be non-eraseable and nonrewritable

Front 95

Exception reports (unusual activity in customer accounts) - FINRA rule 4311

Back 95