about this book xv about the test bank xvii … · about the test bank xvii about the securities...
TRANSCRIPT
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Contents
ABOUT THE SERIES 26 EXAM XI
ABOUT THIS BOOK XV
ABOUT THE TEST BANK XVII
ABOUT THE SECURITIES INSTITUTE OF AMERICA XIX
CHAPTER 1BROKERAGE OFFICE PROCEDURES 1
Hiring New Employees 1
Resignation of a Registered Representative 2
Registration Exemptions 3
Persons Ineligible to Register 3
Disciplinary Actions against a Registered Representative 4
Termination for Cause 5
Outside Employment 5
Private Securities Transactions 5
Gift Rule 6
Sharing in a Customer’s Account 7
Borrowing and Lending Money 7
Order Tickets 7
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vi Contents
Executing an Order 8
Becoming a Stockholder 9
Dividend Distribution 17
Pretest 21
CHAPTER 2RECORD KEEPING, FINANCIAL REQUIREMENTS, AND REPORTING 25
Types of Records 25
Storage Requirements 27
Financial Requirements 30
Pretest 45
CHAPTER 3RECOMMENDATIONS TO CUSTOMERS 51
General Guidelines 51
Recommending Mutual Funds 52
Exchange-Traded Funds (ETFs) 56
Periodic Payment Plans 57
Mutual Fund Current Yield 58
Suitability 58
Fair Dealings with Customers 58
Recommendations to an Institutional Customer 62
Short Sales in Connection with Recommendations 63
Issuing Research Reports 63
Regulation FD (Fair Disclosure) 66
Pretest 67
CHAPTER 4GENERAL SUPERVISION 71
The Role of the Principal 71
Supervisor Qualifi cations and Prerequisites 72
Continuing Education 73
Tape Recording Employees 74
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Contents vii
Heightened Supervisory Requirements 75
Information Obtained from an Issuer 75
Customer Complaints 76
Investor Information 76
Member Offi ces 77
Currency Transactions 78
The Patriot Act 79
Pretest 81
CHAPTER 5CUSTOMER ACCOUNTS 85
New Accounts 85
Holding Securities 87
The Depository Trust Company (DTC) 88
Mailing Instructions 89
Types of Account Ownership 89
Trading Authorization 91
Accounts for Employees of Other Broker Dealers 96
Numbered Accounts 96
Prime Brokerage Accounts 96
Account Transfer 97
Margin Accounts 98
Day Trading Accounts 99
Commingling Customer’s Pledged Securities 100
Wrap Accounts 100
Regulation S-P 100
Pretest 103
CHAPTER 6 INVESTMENT COMPANIES 107
Investment Company Philosophy 107
Types of Investment Companies 108
Investment Company Registration 111
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viii Contents
Investment Company Components 113
Mutual Fund Distribution 115
Mutual Fund Prospectus 116
Anti-Reciprocal Rule 118
Valuing Mutual Fund Shares 119
Sales Charges 120
Taxation of Mutual Funds 127
Voting Rights 132
Yields 133
Portfolio Turnover 133
Purchasing Mutual Fund Shares 133
Withdrawal Plans 136
Pretest 139
CHAPTER 7 VARIABLE ANNUITIES, LIFE INSURANCE, AND RETIREMENT PLANS 143
Annuities 143
Life Insurance 152
Retirement Plans 157
Death of an IRA Owner 162
ERISA 404C SAFE HARBOR 170
Pretest 171
CHAPTER 8 SECURITIES INDUSTRY RULES AND REGULATIONS 175
Issuing Securities 175
The Securities Exchange Act of 1934 178
The National Association of Securities Dealers (NASD) 181
Becoming a Member of FINRA 183
Foreign Broker Dealers 184
Registration of Agents/Associated Persons 185
Retiring Representatives/Continuing Commissions 185
State Registration 186
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Communications with the Public 186
Securities Investor Protection Corporation Act of 1970 (SIPC) 191
The Securities Acts Amendments of 1975 192
The Insider Trading & Securities Fraud Enforcement Act of 1988 193
The Telephone Consumer Protection Act of 1991 194
The Penny Stock Cold Call Rule 194
Violations and Complaints 195
Political Contributions 199
Investment Adviser Registration 200
Investment Adviser Representatives 202
Investment Adviser Advertising and Sales Literature 203
Investment Adviser Brochure Delivery 204
Soft Dollars 204
Broker Dealers on the Premises of Other Financial Institutions 206
The Uniform Securities Act 206
Sarbanes-Oxley Act 207
SEC Regulation S-K 208
SEC Regulation M-A 209
The Hart-Scott-Rodino Act 210
FINRA Rule 2290 (Fairness Opinion) 211
SEC Regulation S-X 212
Pretest 213
ANSWER KEYS 217
GLOSSARY OF EXAM TERMS 225
INDEX 291
Contents ix
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