Regulations - Answers

  1. A. One registers with a federal commission like the SEC or CFTC; one joins an industry association like the NFA.
  2. B. An AP needs three years in the field to handle discretionary accounts, and may require further licensure to supervise.
  3. D. The others are false.
  4. C. Not all testimonials are necessarily paid testimonials.
  5. D. Compliance directors initiate investigations. MRAs and offers to settle bypass the hearing process. Although arbitration cannot be appealed, disciplinary hearings can.
  6. B. The broker/dealer must apply to offer security futures through the process of notice registration with the CFTC, unless that broker/dealer is fully registered with both the CFTC and the SEC in which case it may offer a full range of both futures and securities products.
  7. C. A series 24 is a FINRA general securities principal, a 53 is a municipal fund securities principal (for brokerage firms that write 529 plan (a municipal fund security) business and a Series 3 is the license for an associated person who holds no supervisory capability).
  8. 3. The other three organizations are federal agencies that regulate futures, securities and banks.
  9. A. CFTC requires segregation of accounts from firm assets. By contrast, SIPC rules protect account values up to specific thresholds, with differing limits for cash and securities.



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