Finra Series-6 Exam Questions

The Investment Company Act of 1940 regulates the organizational structure and day-to-day operations of investment companies. The Act includes requirements regarding a fund's capital structure, the custody of its assets, its investment activities, and the duties of a fund's board of directors, among other things. The Securities Act of 1933 regulates the offering of a fund's shares and requires that prospective investors be provided with a prospectus. The Securities Exchange Act of 1934 regulates secondary market activities in investment company shares and includes laws governing the principal underwriters and brokers and dealers who sell investment company shares. The Investment Advisers Act of 1940 regulates investment advisers and includes laws pertaining to their registration and recordkeeping, custodial, and reporting responsibilities.

Of the selections, only 12b-1 fees and management fees are included in the expense ratio of the fund. Brokerage costs that the fund incurs when it buys and sells securities are not included (which is why a fund's turnover ratio is important to consider.) Redemption fees are paid by the shareholder to the fund, so it would not be included in a fund's expense ratio since it is not an expense of the fund.

Since Joan is a customer of GetErDone, GetErDone must provide her with a notification of its privacy policies annually and provide her with information on how to mandate that it not share her nonpublic personal information with nonaffiliated third parties. GetErDone may not disclose any information about Jean, who is not yet a customer of the firm, unless the broker -dealer has provided Jean with its privacy policy and given her the opportunity to opt out of its ability to share her information with nonaffiliated third parties. GetErDone is not required to have provided Jean with a copy of its privacy policy when she inquired about opening an account, but it will need to provide her with one when/if she becomes a customer.

Upon receiving a complaint about one of its member firms, FINRA may require any person associated with the member firm to provide information and to testify under oath; it may inspect and copy the books, records, and accounts of the member firm; and it may share information obtained from its investigation of a member firm with a foreign regulatory agency. The foreign regulator must agree to treat the information confidentiality, and the agreement with the foreign regulator is predicated on two requirements: ''(A) the other regulator party to the agreement must have jurisdiction over common regulatory matters; and (B) the agreement must require the other regulator to reciprocate and share with FINRA information of regulatory interest or concern to FINRA.''

Among other things, the trade confirmation that Anna receives must stipulate the items described in Selections I and III only. The trade confirmation that Anna receives from GetErDone must stipulate the time and date of the transaction, the number of shares sold, and the price at which they were sold. The exchange or ECN on which the transaction was executed is not provided on the confirmation statement. Whether GetErDone acted as a principal or a broker in the transaction does need to be stipulated, but in this instance GetErDone acted as a broker, not a principal. GetErDone did not itself buy the shares from Anna.