Title Details

ABOUT THIS BOOK XV

ABOUT THE TEST BANK XVII

ABOUT THE SECURITIES INSTITUTE OF AMERICA XIX

CHAPTER 1 BROKERAGE 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

Executing an Order 8

Becoming a Stockholder 9

Dividend Distribution 17

Pretest 21

CHAPTER 2 RECORD KEEPING, FINANCIAL REQUIREMENTS, AND REPORTING 25

Types of Records 25

Storage Requirements 27

Financial Requirements 30

Pretest 45

CHAPTER 3 RECOMMENDATIONS 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 4 GENERAL SUPERVISION 71

The Role of the Principal 71

Supervisor Qualifications and Prerequisites 72

Continuing Education 73

Tape Recording Employees 74

Information Obtained from an Issuer 75

Customer Complaints 75

Investor Information 76

Member Offices 76

Currency Transactions 78

The Patriot Act 78

Pretest 81

CHAPTER 5 CUSTOMER 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

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

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

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