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Investment Dealer Supervisors Course (IDSC) – AceCSE.com
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Question 1 of 30
1. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), which of the following statement(s) is/are correct when the Uniform Practice Code Committee may, in its discretion, issue notification that all open contracts with the member in question may be closed-out immediately?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), the Uniform Practice Code Committee may, in its discretion, issue notification that all open contracts with the member in question may be closed-out immediately on following conditions:-
(a) The Uniform Practice Code Committee ascertains that a court has appointed a receiver for any member because of its insolvency or failure to meet its obligations.
(b) The Uniform Practice Code Committee ascertains, based upon the evidence before it, that a member cannot meet its obligations as they become due and that such action will be in the public interest.Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), the Uniform Practice Code Committee may, in its discretion, issue notification that all open contracts with the member in question may be closed-out immediately on following conditions:-
(a) The Uniform Practice Code Committee ascertains that a court has appointed a receiver for any member because of its insolvency or failure to meet its obligations.
(b) The Uniform Practice Code Committee ascertains, based upon the evidence before it, that a member cannot meet its obligations as they become due and that such action will be in the public interest. -
Question 2 of 30
2. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), which of the following statement is correct for the term “close-out immediately” that is notified by the Uniform Practice Code Committee for all open contracts with the member in question?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), the following statements are correct for the term “close-out immediately” that is notified by the Uniform Practice Code Committee for the all open contracts with the member in question:-
(a) “buy-ins” may be executed without prior notice of intent to “buy-in”.
(b) “sell-outs” may be executed without making prior delivery of the securities called for.Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), the following statements are correct for the term “close-out immediately” that is notified by the Uniform Practice Code Committee for the all open contracts with the member in question:-
(a) “buy-ins” may be executed without prior notice of intent to “buy-in”.
(b) “sell-outs” may be executed without making prior delivery of the securities called for. -
Question 3 of 30
3. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), at what time before the notification of all close-outs should immediately be sent to the member pursuant to the confirmation provisions of the Rule 11200 Series?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), all close-outs shall be executed for the account and liability of the member in question. Notification of all close-outs shall immediately be sent to such member pursuant to the confirmation provisions of the Rule 11200 Series at least thirty minutes before such close-out.
Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), all close-outs shall be executed for the account and liability of the member in question. Notification of all close-outs shall immediately be sent to such member pursuant to the confirmation provisions of the Rule 11200 Series at least thirty minutes before such close-out.
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Question 4 of 30
4. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), which of the following statement(s) is/are correct for contracts made for “cash,” or made for or amended to include guaranteed delivery on a specified date?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), Contracts made for “cash,” or made for or amended to include guaranteed delivery on a specified date may be “bought-in” without notice during the normal trading hours on the day following the date delivery is due on the contract.
Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), Contracts made for “cash,” or made for or amended to include guaranteed delivery on a specified date may be “bought-in” without notice during the normal trading hours on the day following the date delivery is due on the contract.
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Question 5 of 30
5. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), which of the following type of section or desk with adequately staffed to process and research all “buy-ins” within the required time frames should be held by members?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), members shall have a “buy-in” section or desk with adequately staffed to process and research all “buy-ins” within the required time frames.
Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), members shall have a “buy-in” section or desk with adequately staffed to process and research all “buy-ins” within the required time frames.
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Question 6 of 30
6. Question
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), which of the following statement(s) is/are correct where securities have been delivered by the seller after the “buy-in” order has been placed by the party affecting the “buy-in”?
Correct
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), where securities have been delivered by the seller after the “buy-in” order has been placed by the party affecting the “buy-in,” the securities may be returned to the seller if the “buy-in” was executed in accordance with FINRA Rule 11810 before it could reasonably be canceled by the initiating party.
Incorrect
In the FINRA Rule 11810 (Buy-In Procedures and Requirements), where securities have been delivered by the seller after the “buy-in” order has been placed by the party affecting the “buy-in,” the securities may be returned to the seller if the “buy-in” was executed in accordance with FINRA Rule 11810 before it could reasonably be canceled by the initiating party.
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Question 7 of 30
7. Question
In the FINRA Rule 11820 (Selling-Out), which of the following action should be taken by the seller if the buyer fails to accept delivery in accordance with the terms of the contract, and lacking a properly executed Uniform Reclamation Form or the equivalent depository generated advice for depository eligible securities meeting the requirements prescribed in Rule 11710(b)?
Correct
In the FINRA Rule 11820 (Selling-Out), upon failure of the buyer to accept delivery in accordance with the terms of the contract, and lacking a properly executed Uniform Reclamation Form or the equivalent depository generated advice for depository eligible securities meeting the requirements prescribed in Rule 11710(b), the seller may, without notice, “sell-out” in the best available market and for the account and liability of the party in default all or any part of the securities due or deliverable under the contract.
Incorrect
In the FINRA Rule 11820 (Selling-Out), upon failure of the buyer to accept delivery in accordance with the terms of the contract, and lacking a properly executed Uniform Reclamation Form or the equivalent depository generated advice for depository eligible securities meeting the requirements prescribed in Rule 11710(b), the seller may, without notice, “sell-out” in the best available market and for the account and liability of the party in default all or any part of the securities due or deliverable under the contract.
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Question 8 of 30
8. Question
In the FINRA Rule 11840 (Rights and Warrants), the transactions in rights to subscribe shall be on the basis of one right accruing to each share of issued stock and the unit of trading in rights shall be in how many rights?
Correct
In the FINRA Rule 11840 (Rights and Warrants), except as otherwise designated by the Committee, transactions in rights to subscribe shall be on the basis of one right accruing to each share of issued stock and the unit of trading in rights shall be 100 rights (unless otherwise specified).
Incorrect
In the FINRA Rule 11840 (Rights and Warrants), except as otherwise designated by the Committee, transactions in rights to subscribe shall be on the basis of one right accruing to each share of issued stock and the unit of trading in rights shall be 100 rights (unless otherwise specified).
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Question 9 of 30
9. Question
In the FINRA Rule 11840 (Rights and Warrants), the transactions in-stock purchase warrants shall be on the basis of one warrant representing the right of the purchaser to receive one warrant in settlement of such transaction and the unit of trading shall be in how many warrants?
Correct
In the FINRA Rule 11840 (Rights and Warrants), except as otherwise agreed or designated by the Committee, transactions in-stock purchase warrants shall be on the basis of one warrant representing the right of the purchaser to receive one warrant in settlement of such transaction and the unit of trading shall be 100 warrants.
Incorrect
In the FINRA Rule 11840 (Rights and Warrants), except as otherwise agreed or designated by the Committee, transactions in-stock purchase warrants shall be on the basis of one warrant representing the right of the purchaser to receive one warrant in settlement of such transaction and the unit of trading shall be 100 warrants.
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Question 10 of 30
10. Question
In the FINRA Rule 11840 (Rights and Warrants), deliveries effected more than how many days after expiration should consist of expired securities if contracts for warrants, rights or other securities have expired by their terms?
Correct
In the FINRA Rule 11840 (Rights and Warrants), In contracts for warrants, rights or other securities which have expired by their terms, deliveries affected more than 30 days after expiration shall be consist of the following:-
(a) The expired securities.
(b) A Letter of Indemnity in lieu of the expired instrument.Incorrect
In the FINRA Rule 11840 (Rights and Warrants), In contracts for warrants, rights or other securities which have expired by their terms, deliveries affected more than 30 days after expiration shall be consist of the following:-
(a) The expired securities.
(b) A Letter of Indemnity in lieu of the expired instrument. -
Question 11 of 30
11. Question
In the FINRA Rule 11860 (COD Orders), which of the following procedure should be followed for acceptance of an order by a member from a customer, including foreign customers and/or broker-dealer’s trading with or through the member?
Correct
In the FINRA Rule 11860 (COD Orders), No member shall accept an order from a customer, including foreign customers and/or broker-dealer’s trading with or through the member, for eligible transactions of such customers that settle in the United States, pursuant to an arrangement whereby payment for securities purchased or delivery of securities sold is to be made to or by an agent of the customer unless the member shall have received from the customer prior to or at the time of accepting the order, the name and address of the agent and the time and account number of the customer on file with the agent and institution number, where appropriate.
Incorrect
In the FINRA Rule 11860 (COD Orders), No member shall accept an order from a customer, including foreign customers and/or broker-dealer’s trading with or through the member, for eligible transactions of such customers that settle in the United States, pursuant to an arrangement whereby payment for securities purchased or delivery of securities sold is to be made to or by an agent of the customer unless the member shall have received from the customer prior to or at the time of accepting the order, the name and address of the agent and the time and account number of the customer on file with the agent and institution number, where appropriate.
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Question 12 of 30
12. Question
In the FINRA Rule 11860 (COD Orders), at what time the member shall deliver to the customer all relevant data customarily contained in confirmation with respect to the execution of the order?
Correct
In the FINRA Rule 11860 (COD Orders), the member shall deliver to the customer, a confirmation or all relevant data customarily contained in confirmation with respect to the execution of the order, in whole or in part, not later than the close of business on the next business day after any such execution.
Incorrect
In the FINRA Rule 11860 (COD Orders), the member shall deliver to the customer, a confirmation or all relevant data customarily contained in confirmation with respect to the execution of the order, in whole or in part, not later than the close of business on the next business day after any such execution.
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Question 13 of 30
13. Question
In the FINRA Rule 11860 (COD Orders), which of the following conditions the customer will assure that instructions are delivered to its agent?
Correct
In the FINRA Rule 11860 (COD Orders), the customer will assure that instructions are delivered to its agent on the following conditions:-
(a) In the case of a purchase by the customer where the agent is to receive the securities against payment (COD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.
(b) In the case of a sale by the customer where the agent is to deliver the securities against payment (POD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.Incorrect
In the FINRA Rule 11860 (COD Orders), the customer will assure that instructions are delivered to its agent on the following conditions:-
(a) In the case of a purchase by the customer where the agent is to receive the securities against payment (COD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.
(b) In the case of a sale by the customer where the agent is to deliver the securities against payment (POD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates. -
Question 14 of 30
14. Question
In the FINRA Rule 11860 (COD Orders), which of the following facilities should be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States?
Correct
In the FINRA Rule 11860 (COD Orders), the facilities of a Clearing Agency shall be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States.
Incorrect
In the FINRA Rule 11860 (COD Orders), the facilities of a Clearing Agency shall be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States.
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Question 15 of 30
15. Question
Which of the following statement(s) is/are correct for a “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders)?
Correct
The following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders):-
(a) That shall deliver a trade record to a Clearing Agency in the Clearing Agency’s format.
(b) That shall obtain a control number for the trade record from the Clearing Agency.
(c) That shall cross-reference the control number to the confirmation and subsequent affirmation of the trade.
(d) That shall include the control number when delivering the affirmation of the trade to the Clearing Agency.Incorrect
The following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders):-
(a) That shall deliver a trade record to a Clearing Agency in the Clearing Agency’s format.
(b) That shall obtain a control number for the trade record from the Clearing Agency.
(c) That shall cross-reference the control number to the confirmation and subsequent affirmation of the trade.
(d) That shall include the control number when delivering the affirmation of the trade to the Clearing Agency. -
Question 16 of 30
16. Question
In the FINRA Rule 11860 (COD Orders), which of the following statement(s) is/are correct for a “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers?
Correct
In the FINRA Rule 11860 (COD Orders), the following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers:-
(a) With respect to its electronic trade confirmation/affirmation system, that it has a capacity requirements evaluation and monitoring process that allows the vendor to formulate current and anticipated estimated capacity requirements.
(b) That its electronic trade confirmation/affirmation system has sufficient capacity to process the specified volume of data that it reasonably anticipates being entered into its electronic trade confirmation/affirmation system during the upcoming year.
(c) That its electronic trade confirmation/affirmation system has formal contingency procedures, that the entity has followed a formal process of reviewing the likelihood of contingency occurrences, and that the contingency protocols are reviewed, tested and updated on a regular basis.
(d) That its electronic trade confirmation/affirmation system has a process for preventing, detecting, and controlling any potential or actual systems integrity failures, and its procedures designed to protect against security breaches are followed.
(e) That its current assets exceed its current liabilities by at least $500,000.Incorrect
In the FINRA Rule 11860 (COD Orders), the following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers:-
(a) With respect to its electronic trade confirmation/affirmation system, that it has a capacity requirements evaluation and monitoring process that allows the vendor to formulate current and anticipated estimated capacity requirements.
(b) That its electronic trade confirmation/affirmation system has sufficient capacity to process the specified volume of data that it reasonably anticipates being entered into its electronic trade confirmation/affirmation system during the upcoming year.
(c) That its electronic trade confirmation/affirmation system has formal contingency procedures, that the entity has followed a formal process of reviewing the likelihood of contingency occurrences, and that the contingency protocols are reviewed, tested and updated on a regular basis.
(d) That its electronic trade confirmation/affirmation system has a process for preventing, detecting, and controlling any potential or actual systems integrity failures, and its procedures designed to protect against security breaches are followed.
(e) That its current assets exceed its current liabilities by at least $500,000. -
Question 17 of 30
17. Question
In the FINRA Rule 11860 (COD Orders), what is the time interval for the submission of an Auditor’s Report to the SEC staff by the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service when it begins providing services?
Correct
In the FINRA Rule 11860 (COD Orders), when “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service begins to provide such services and thereafter annually submits an Auditor’s Report to the SEC staff which is not deemed unacceptable by the SEC staff.
Incorrect
In the FINRA Rule 11860 (COD Orders), when “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service begins to provide such services and thereafter annually submits an Auditor’s Report to the SEC staff which is not deemed unacceptable by the SEC staff.
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Question 18 of 30
18. Question
In the FINRA Rule 11860 (COD Orders), which of the following action should be taken by “Qualified Vendor” if it intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff?
Correct
In the FINRA Rule 11860 (COD Orders), immediately notifies the SEC staff in writing if “Qualified Vendor” intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff.
Incorrect
In the FINRA Rule 11860 (COD Orders), immediately notifies the SEC staff in writing if “Qualified Vendor” intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff.
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Question 19 of 30
19. Question
In the FINRA Rule 11860 (COD Orders), which of the following condition the “Qualified Vendor” may cease to be qualified?
Correct
In the FINRA Rule 11860 (COD Orders), a vendor may cease to be qualified on the following conditions:-
(a) The SEC staff deems the Auditor’s report unacceptable either because it contains any findings of material weaknesses, or for other identified reasons.
(b) The SEC staff notifies the vendor in writing that it is no longer qualified.Incorrect
In the FINRA Rule 11860 (COD Orders), a vendor may cease to be qualified on the following conditions:-
(a) The SEC staff deems the Auditor’s report unacceptable either because it contains any findings of material weaknesses, or for other identified reasons.
(b) The SEC staff notifies the vendor in writing that it is no longer qualified. -
Question 20 of 30
20. Question
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by which of the following authority?
Correct
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by competent, independent, external audit personnel in accordance with the standards of the American Institute of Certified Public Accountants and the Information Systems Audit and Control Association.
Incorrect
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by competent, independent, external audit personnel in accordance with the standards of the American Institute of Certified Public Accountants and the Information Systems Audit and Control Association.
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Question 21 of 30
21. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following statement(s) satisfies the term “nontransferable asset” that is incapable of being transferred from the carrying member to the receiving member?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the following statement(s) satisfies the term “nontransferable asset” that is incapable of being transferred from the carrying member to the receiving member:-
(a) An asset that is a proprietary product of the carrying member.
(b) An asset that is a product of a third party (e.g., mutual fund/money market fund) with which the receiving member does not maintain the relationship or arrangement necessary to receive/carry the asset for the customer’s account.
(c) An asset that may not be received due to regulatory limitations on the scope of the receiving member’s business.
(d) An asset that is a bankrupt issue for which the carrying member does not possess (which shall be deemed to include possession at a securities depository for the carrying member’s account) the proper denominations or quantity of shares necessary to effect delivery and no transfer agent is available to re-register the shares.
(e) An asset that is an issue for which the proper denominations cannot be obtained pursuant to governmental regulation or the issuance terms of the product (e.g., foreign securities, baby bonds, etc.).
(f) Limited partnership interests in retail accounts.Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the following statement(s) satisfies the term “nontransferable asset” that is incapable of being transferred from the carrying member to the receiving member:-
(a) An asset that is a proprietary product of the carrying member.
(b) An asset that is a product of a third party (e.g., mutual fund/money market fund) with which the receiving member does not maintain the relationship or arrangement necessary to receive/carry the asset for the customer’s account.
(c) An asset that may not be received due to regulatory limitations on the scope of the receiving member’s business.
(d) An asset that is a bankrupt issue for which the carrying member does not possess (which shall be deemed to include possession at a securities depository for the carrying member’s account) the proper denominations or quantity of shares necessary to effect delivery and no transfer agent is available to re-register the shares.
(e) An asset that is an issue for which the proper denominations cannot be obtained pursuant to governmental regulation or the issuance terms of the product (e.g., foreign securities, baby bonds, etc.).
(f) Limited partnership interests in retail accounts. -
Question 22 of 30
22. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the carrying member and the receiving member must promptly resolve and reverse any nontransferable assets that were not properly identified during validation. In all cases, each member shall promptly update its records and bookkeeping systems and notify which of the following authority about the action taken?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the carrying member and the receiving member must promptly resolve and reverse any nontransferable assets that were not properly identified during validation. In all cases, each member shall promptly update its records and bookkeeping systems and notify the customer about the action taken.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the carrying member and the receiving member must promptly resolve and reverse any nontransferable assets that were not properly identified during validation. In all cases, each member shall promptly update its records and bookkeeping systems and notify the customer about the action taken.
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Question 23 of 30
23. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), a proprietary product of the carrying member should be deemed nontransferable unless the transfer of product is accepted by which of the following authority?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), a proprietary product of the carrying member shall be deemed nontransferable unless the receiving member has agreed to accept the transfer of the product.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), a proprietary product of the carrying member shall be deemed nontransferable unless the receiving member has agreed to accept the transfer of the product.
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Question 24 of 30
24. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following authority distributes the resulting money balance to the customer if the customer has authorized liquidation or transfer of assets deemed to be nontransferable?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), If the customer has authorized liquidation or transfer of assets deemed to be nontransferable, the carrying member must distribute the resulting money balance to the customer or initiate the transfer within five (5) business days following receipt of the customer’s disposition instructions.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), If the customer has authorized liquidation or transfer of assets deemed to be nontransferable, the carrying member must distribute the resulting money balance to the customer or initiate the transfer within five (5) business days following receipt of the customer’s disposition instructions.
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Question 25 of 30
25. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), within how many days the carrying member shall initiate the transfer if the customer has authorized liquidation or transfer of assets deemed to be nontransferable?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), If the customer has authorized liquidation or transfer of assets deemed to be nontransferable, the carrying member must distribute the resulting money balance to the customer or initiate the transfer within five (5) business days following receipt of the customer’s disposition instructions.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), If the customer has authorized liquidation or transfer of assets deemed to be nontransferable, the carrying member must distribute the resulting money balance to the customer or initiate the transfer within five (5) business days following receipt of the customer’s disposition instructions.
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Question 26 of 30
26. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following authorized by the customer to the custodian/trustee for the account with respect to transfers of retirement plan securities account assets?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), with respect to transfers of retirement plan securities account assets, the customer authorizes the custodian/trustee for the account:-
(a) To deduct any outstanding fees due to the custodian/trustee from the credit balance in the account.
(b) If the account does not contain a credit balance, or if the credit balance in the account is insufficient to satisfy any outstanding fees due the custodian/trustee, to liquidate assets in the account to the extent necessary to satisfy any outstanding fees due the custodian/trustee.Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), with respect to transfers of retirement plan securities account assets, the customer authorizes the custodian/trustee for the account:-
(a) To deduct any outstanding fees due to the custodian/trustee from the credit balance in the account.
(b) If the account does not contain a credit balance, or if the credit balance in the account is insufficient to satisfy any outstanding fees due the custodian/trustee, to liquidate assets in the account to the extent necessary to satisfy any outstanding fees due the custodian/trustee. -
Question 27 of 30
27. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following action should be taken by a carrying member upon validation of an instruction to transfer securities account assets as a whole?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), upon validation of an instruction to transfer securities account assets in whole, a carrying member must “freeze” the account to be transferred, i.e., all open orders, with the exception of options positions that expire within seven (7) business days, must be canceled and no new orders may be taken.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), upon validation of an instruction to transfer securities account assets in whole, a carrying member must “freeze” the account to be transferred, i.e., all open orders, with the exception of options positions that expire within seven (7) business days, must be canceled and no new orders may be taken.
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Question 28 of 30
28. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following conditions a carrying member may take exception to a transfer instruction?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), a carrying member may take exception to a transfer instruction on the following conditions:-
(a) Additional documentation is required (e.g., legal documents such as death or marriage certificate).
(b) The account is “flat” and reflects no transferable assets.
(c) The account number is invalid (i.e., the account number is not on the carrying member’s books).
(d) It is a duplicate request.
(e) It violates the member’s credit policy.
(f) It contains unrecognized residual credit assets (receiving members cannot identify customers).
(g) The customer rescinds the instruction (e.g., the customer has submitted a written request to cancel transfer).
(h) There is a mismatch of the Social Security number/Tax ID (e.g., the number on the transfer instruction does not correspond to that on the carrying member’s records).
(j) The account title on the transfer instruction does not match that on the carrying member’s records.
(k) The account type on the transfer instruction does not correspond to that on the carrying member’s records.
(l) The transfer instruction is missing or contains an improper authorization (e.g., TIF requires an additional customer authorization or successor custodian’s acceptance authorization or custodial approval).
(m) The customer has taken possession of the assets in the account (e.g., the account assets in question have been transferred directly to the customer).Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), a carrying member may take exception to a transfer instruction on the following conditions:-
(a) Additional documentation is required (e.g., legal documents such as death or marriage certificate).
(b) The account is “flat” and reflects no transferable assets.
(c) The account number is invalid (i.e., the account number is not on the carrying member’s books).
(d) It is a duplicate request.
(e) It violates the member’s credit policy.
(f) It contains unrecognized residual credit assets (receiving members cannot identify customers).
(g) The customer rescinds the instruction (e.g., the customer has submitted a written request to cancel transfer).
(h) There is a mismatch of the Social Security number/Tax ID (e.g., the number on the transfer instruction does not correspond to that on the carrying member’s records).
(j) The account title on the transfer instruction does not match that on the carrying member’s records.
(k) The account type on the transfer instruction does not correspond to that on the carrying member’s records.
(l) The transfer instruction is missing or contains an improper authorization (e.g., TIF requires an additional customer authorization or successor custodian’s acceptance authorization or custodial approval).
(m) The customer has taken possession of the assets in the account (e.g., the account assets in question have been transferred directly to the customer). -
Question 29 of 30
29. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), within how many days following the validation of a transfer instruction, the carrying member must complete the transfer of the customer’s security account assets to the receiving member?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the carrying member must complete the transfer of the customer’s security account assets to the receiving member within three business days following the validation of a transfer instruction.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), the carrying member must complete the transfer of the customer’s security account assets to the receiving member within three business days following the validation of a transfer instruction.
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Question 30 of 30
30. Question
In the FINRA Rule 11870 (Customer Account Transfer Contracts), which of the following authority on completion of the transfer must immediately establish fail-to-receive and fail-to-deliver contracts at then-current market values upon their respective books of account against the long/short positions?
Correct
In the FINRA Rule 11870 (Customer Account Transfer Contracts), on completion of the transfer the receiving member and the carrying member must immediately establish fail-to-receive and fail-to-deliver contracts at then-current market values upon their respective books of account against the long/short positions.
Incorrect
In the FINRA Rule 11870 (Customer Account Transfer Contracts), on completion of the transfer the receiving member and the carrying member must immediately establish fail-to-receive and fail-to-deliver contracts at then-current market values upon their respective books of account against the long/short positions.