Regulations - Answers
- A. One registers with a federal commission like the SEC or CFTC; one joins an industry association like the NFA.
- B. An AP needs three years in the field to handle discretionary accounts, and may require further licensure to supervise.
- D. The others are false.
- C. Not all testimonials are necessarily paid testimonials.
- D. Compliance directors initiate investigations. MRAs and offers to settle bypass the hearing process. Although arbitration cannot be appealed, disciplinary hearings can.
- 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.
- 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).
- 3. The other three organizations are federal agencies that regulate futures, securities and banks.
- 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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