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25 Cards in this Set
- Front
- Back
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Form u4
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The form filled out and stored with the CRD to manage all Registered Representatives
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CRD
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Central Registration Depository which holds all the registered representative information to track eligibility
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Statutory Disqualification
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Certain employees are not eligible to be registered if they have been expelled by an SRO, violated a securities law, been convicted of a felory or misdemeanor related to fraud, extortion or bribery in last 10 years |
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Form U5
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Filled out when a registered representatives is terminated or leaves a broker-dealer. After leaving the RR has a two-year window before the license expires
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Form U6
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Used to keep track of disciplinary actions or arbitration awards against an RR or a firm
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Broker Check
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Allows customers to track an RR information on investments
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Investor Education |
One a year firms need to send customers written disclosure of: FINRA Regulation Public Disclosure Program, FINRA's web address, availability of an investor brochure that details FINRA's brokercheck program
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Blue-Sky Rules
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RR's need to be registered within the state they conduct business
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Regulatory Element of Continuing Education
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An RR must participate in Regulatory Element training at the two year anniversary of when they passed Series 7 and every three years after. The RR has 120 days from the anniversary date to take the test or they will be ruled inactive. Firms are also responsible for showing they have provided the necessary training for their employees
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Inactive Status Military Duty
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Military personnel are not held to the two year window of leaving the industry
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Outside Business Activities
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An RR employed a FINRA firm must notify their broker-dealer of any work they do outside the firm that isn't volunteer work
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Private Securities Transactions
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Defined as those actions executed outside the scope of a person's employment with the firm. If the associated person is receiving compensation the RR cannot participate until the firm gives them written confirmation. If the RR isn't receiving payment they still may need confirmation
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Selling Away
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Not disclosing private securities transactions to your firm
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Outside Accounts for Employees of Other Member Firms
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If an RR is going to open an account at another firm, the host firm of the new account: Provide Written notification to the RR's employer firm of the intention to open the account Send duplicate confirmations and statements to employer firm if requested Notify the person opening the account that these procedures will be followed |
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Requirements for RR's when Outside Accounts are Opened
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the RR must give written notice to the new firm about being an employee of the old firm, and he must give written notice to his employer about his new account. This also applies if the RR's spouse or dependent children open an account elsewhere
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Churning
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Excessive trading typically done by an RR for the purpose of generating additional commissions. This can occur even when the customer is making money |
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Discretionary Accounts
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A customer provides an RR with written permission to execute transactions without needing the customers approval on a trade by trade basis.
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Sharing in Accounts
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An RR cannot share profits or losses in a customer account unless they are a joint owner
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Compensating Retired RR's
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A retired RR can still make money off of their sales prior to retirement (known as a trailer). The broker-dealer can only make these payouts if a contract had been signed by the RR
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Gift Limit
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$100 per year is allowed for any payment to a customer that is related to their business. The exception to this rule is: Personal gifts unrelated to the business, promotional items and de minimis gifts, business entertainment, compensation for services
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Splitting Commissions
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Two RR's for the same firm can split commissions on an account
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Borrowing and Lending Practices |
An RR cannot borrow or lend money to a customer unless they are a family member, a financial institution engaged in providing credit or loans, both registered members of the same broker dealer, have a personal relationship outside of business
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Forgery
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The act of signed someone else's name toa document without authorization - not allowed
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Front-Running
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RR's cannot take advantage of the information that other investors are about to effect large block transactions or that they hold a lot of stock in a company already (the RR could then liquidate their shares after this large purchase)
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Confidentiality of Client Information
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RR's cannot release confidential information to anyone except a regulatory authority like the SEC or IRS
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