Series 24 Study Guide with Complete
Solutions
A registered representative is moving to a new broker-dealer. If her customers have
filled out the transfer request forms, the following is true: - ANS-The carrying firm is
permitted to contact the customer
If a customer is required to take a RMD from his IRA, what are the requirements
surrounding this client's distribution obligation? - ANS-The distribution must be made by
April 1 in the year AFTER the client turns 72 and the customer is permitted to remove
cash or securities. If securities are moved, cost basis is stepped up to reflect as if
securities were sold, new cost basis is established.
A transaction in a TRACE-eligible security is executed at 6:10 a.m. The trade must be
reported to FINRA: - ANS-No later than 15 minutes after the TRACE system opens.
A broker-dealer intends to hire a salesperson who has never worked for a member firm.
During the interview, the candidate discloses that he was arrested and charged with a
misdemeanor for forgery. - ANS-This must be disclosed on the person's Form U4.
What type of offering will permit a US public company to quickly raise an unlimited
amount of capital from an unlimited number of both retail and institutional investors
without registering the securities with the SEC? - ANS-A Regulation S offering. A
regulation A offering limits the dollar amount of securities that may be raised by the
issuer to $75 million.
SIPC protection is NOT provided in this instance: - ANS-Securities registered in the
name of the customer when they are held by the customer
What types of transactions would NOT be reported on the Consolidated Tape? - ANS-A
private placement in a stock listed on the NYSE
Who is permitted to be the emergency contact for a member firm that has only one
associated person? - ANS-The associated person and an employee of another firm who
has knowledge of the member firm's operations (typically the firm's attorney,
accountant, or a clearing firm contact). FINRA employees cannot serve as a member
firm's emergency contact.
An investor who is a registered investment adviser wants to place a limit order to sell
5,000 shares of a Nasdaq stock at 26.75. The broker-dealer has disclosed to the client
that it will accept the order but may trade ahead of it. The following is true: - ANS-If the
, client accepts the conditions, the order does not need to be protected under the
Manning Rule because the value of the trade is greater than $100,000
Your firm is advising Industrial Paper in a proposed acquisition of Corrugated Box. The
company intends to issue debt to finance the purchase, and is filing Form 8-K to
announce the proposed acquisition. The following is NOT true regarding the disclosure
documents filed in conjunction with the deal: - ANS-If your firm renders a fairness
opinion regarding the terms of the acquisition, it may not undermine the new debt
offering of Industrial Paper
A broker-dealer that sells mutual funds is required to submit payments received from
customers to the investment company no later than: - ANS-3 business days after the
receipt of the customer's order
What is the day-trading buying power of an account that has a long market value of
$170,000 and a debit balance of $90,000? - ANS-$150,000. Day-trading buying power
is limited to 4x the trader's maintenance margin excess, as of close of previous day. The
SRO maintenance requirement is 25% of the long market value ($42,500). Therefore,
the excess maintenance requirement is $80,000 less $42,500 or $37,500. The day-
trading buying power is 4 x $37,500 which equals $150,000.
Who may suspend or expel a member firm from FINRA membership? - ANS-Both a
hearing panel and the National Adjudicatory Council may suspend or expel a FINRA
member firm.
The term deficiency letter is associated with a: - ANS-Registration statement for an
offering that will be registered with the SEC
According to FINRA's Corporate Financing Rule, underwriting agreements need not be
filed in what type of offering? - ANS-Restricted securities sold under Regulation D
What is an appropriate account title for a custodial account? - ANS-[Custodian Name]
C/F [Minor Name] under [appropriate state]
When a customer sells securities through a broker-dealer, a mandatory buy-in is
required if the broker-dealer does not receive securities from the customer by the: -
ANS-Tenth business day after the settlement date
A Suspicious Activity Report (SAR) is also called FinCEN Form 101. - ANS-It is filed by
a financial institution if a transaction involves at least $5,000, and the member firm
knows or has reason to believe the funds are derived from an illegal activity, designed
to avoid filing of other forms, or has no legitimate lawful purpose.
The financial reporting responsibility of an introducing broker is limited to: - ANS-Filing
FOCUS Report Part IIA quarterly
Solutions
A registered representative is moving to a new broker-dealer. If her customers have
filled out the transfer request forms, the following is true: - ANS-The carrying firm is
permitted to contact the customer
If a customer is required to take a RMD from his IRA, what are the requirements
surrounding this client's distribution obligation? - ANS-The distribution must be made by
April 1 in the year AFTER the client turns 72 and the customer is permitted to remove
cash or securities. If securities are moved, cost basis is stepped up to reflect as if
securities were sold, new cost basis is established.
A transaction in a TRACE-eligible security is executed at 6:10 a.m. The trade must be
reported to FINRA: - ANS-No later than 15 minutes after the TRACE system opens.
A broker-dealer intends to hire a salesperson who has never worked for a member firm.
During the interview, the candidate discloses that he was arrested and charged with a
misdemeanor for forgery. - ANS-This must be disclosed on the person's Form U4.
What type of offering will permit a US public company to quickly raise an unlimited
amount of capital from an unlimited number of both retail and institutional investors
without registering the securities with the SEC? - ANS-A Regulation S offering. A
regulation A offering limits the dollar amount of securities that may be raised by the
issuer to $75 million.
SIPC protection is NOT provided in this instance: - ANS-Securities registered in the
name of the customer when they are held by the customer
What types of transactions would NOT be reported on the Consolidated Tape? - ANS-A
private placement in a stock listed on the NYSE
Who is permitted to be the emergency contact for a member firm that has only one
associated person? - ANS-The associated person and an employee of another firm who
has knowledge of the member firm's operations (typically the firm's attorney,
accountant, or a clearing firm contact). FINRA employees cannot serve as a member
firm's emergency contact.
An investor who is a registered investment adviser wants to place a limit order to sell
5,000 shares of a Nasdaq stock at 26.75. The broker-dealer has disclosed to the client
that it will accept the order but may trade ahead of it. The following is true: - ANS-If the
, client accepts the conditions, the order does not need to be protected under the
Manning Rule because the value of the trade is greater than $100,000
Your firm is advising Industrial Paper in a proposed acquisition of Corrugated Box. The
company intends to issue debt to finance the purchase, and is filing Form 8-K to
announce the proposed acquisition. The following is NOT true regarding the disclosure
documents filed in conjunction with the deal: - ANS-If your firm renders a fairness
opinion regarding the terms of the acquisition, it may not undermine the new debt
offering of Industrial Paper
A broker-dealer that sells mutual funds is required to submit payments received from
customers to the investment company no later than: - ANS-3 business days after the
receipt of the customer's order
What is the day-trading buying power of an account that has a long market value of
$170,000 and a debit balance of $90,000? - ANS-$150,000. Day-trading buying power
is limited to 4x the trader's maintenance margin excess, as of close of previous day. The
SRO maintenance requirement is 25% of the long market value ($42,500). Therefore,
the excess maintenance requirement is $80,000 less $42,500 or $37,500. The day-
trading buying power is 4 x $37,500 which equals $150,000.
Who may suspend or expel a member firm from FINRA membership? - ANS-Both a
hearing panel and the National Adjudicatory Council may suspend or expel a FINRA
member firm.
The term deficiency letter is associated with a: - ANS-Registration statement for an
offering that will be registered with the SEC
According to FINRA's Corporate Financing Rule, underwriting agreements need not be
filed in what type of offering? - ANS-Restricted securities sold under Regulation D
What is an appropriate account title for a custodial account? - ANS-[Custodian Name]
C/F [Minor Name] under [appropriate state]
When a customer sells securities through a broker-dealer, a mandatory buy-in is
required if the broker-dealer does not receive securities from the customer by the: -
ANS-Tenth business day after the settlement date
A Suspicious Activity Report (SAR) is also called FinCEN Form 101. - ANS-It is filed by
a financial institution if a transaction involves at least $5,000, and the member firm
knows or has reason to believe the funds are derived from an illegal activity, designed
to avoid filing of other forms, or has no legitimate lawful purpose.
The financial reporting responsibility of an introducing broker is limited to: - ANS-Filing
FOCUS Report Part IIA quarterly
