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FINRA Series 7 General Securities Representative Exam

3. Provides Information, Makes Recommendations, Transfers Assets / Customer accounts: practice questions

Our FINRA Series 7 bank has 10 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

Under SEC Rule 15c3-3, a broker-dealer that holds customer fully paid securities must:

  1. Keep them in its possession or control, segregated from firm assets
  2. Lend them to short sellers to earn income for customers
  3. Deliver them to the SEC at year end for safekeeping
  4. Pledge them to banks as collateral for firm loans
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A. Keep them in its possession or control, segregated from firm assets — The customer protection rule requires possession or control of fully paid and excess margin securities and a reserve account for customer cash.

Question 2

SIPC protection for a customer's account at a failed broker-dealer is limited to:

  1. $250,000, including up to $100,000 for cash
  2. $500,000, including up to $250,000 for cash
  3. Unlimited protection for securities only
  4. $1,000,000, including up to $500,000 for cash
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B. $500,000, including up to $250,000 for cash — SIPC protects customer securities and cash up to $500,000 per separate capacity, of which up to $250,000 may be cash; it does not protect against market losses.

Question 3

Under the ACATS transfer rule, after a receiving firm submits a transfer instruction, the carrying firm must validate it or take exception within:

  1. Ten business days
  2. Five business days
  3. One business day
  4. Three business days
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C. One business day — Rule 11870(b) requires validation or exception within one business day and completion within three business days after validation.

Question 4

Under FINRA Rule 2231, a firm must send account statements to customers at least:

  1. Annually
  2. Monthly in every case
  3. Quarterly
  4. Semiannually
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C. Quarterly — Rule 2231 requires statements at least once each calendar quarter showing positions, balances and activity.

Question 5

Under Rule 4530, a firm must report statistical information about written customer complaints to FINRA:

  1. Quarterly, by the 15th day of the month after quarter-end
  2. Within 24 hours of receiving each complaint
  3. Only when a complaint leads to arbitration
  4. Annually, with its audited financial statements
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A. Quarterly, by the 15th day of the month after quarter-end — Rule 4530(d) requires quarterly statistical complaint reports by the 15th of the month after each quarter.

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