SIE section 4: Overview of the Regulatory Framework

1. Before taking part in a private securities transaction, an associated person must:

1. wait 30 days after the sale before telling the firm
2. get written approval from the issuer of the security first
3. file a notice of the sale with the SEC the next business day
4. give the firm written notice describing the deal and the role

2. A member disapproves an associated person's participation in a compensated private securities transaction. The person:

1. may take part if the customer gives consent
2. may take part only if uncompensated by the issuer
3. may not take part in it in any manner, directly or indirectly
4. may take part after waiting thirty days and telling the customer

3. A member approves a rep's compensated private securities transaction. The member must then:

1. treat it as outside the firm's responsibility
2. report it only to the issuer of the security and no one else
3. record it on its books and supervise it as its own
4. let the rep keep all records of it personally

4. For purposes of Rule 3280, selling compensation is pay received:

1. only from the issuer of the security sold
2. from whatever source in connection with a securities sale
3. only in the form of cash payments made by the customer
4. only from the member firm itself, paid directly

5. Which of these is excluded from the Rule 3280 definition of a private securities transaction?

1. A sale among immediate family members with no selling compensation
2. A sale of unregistered securities to a friend for a fee
3. A private placement sold to clients for a finder's fee
4. A new offering sold on the side for a commission without notice to the firm

6. A representative sells interests in a private company to clients for a finder's fee without telling the firm. This most directly violates:

1. Rule 4512 on trusted contact persons
2. Rule 3240 on loans to and from customers of the firm
3. Rule 2165 on holds for senior investors
4. Rule 3280 on private securities transactions

7. Under Rule 3270, a registered person who will be compensated by another business must generally give the member:

1. a notice sent after the first paycheck arrives
2. a verbal heads-up given the following year
3. an SEC filing made by the person before starting work
4. prior written notice in the form the member specifies

8. Which is exempt from the Rule 3270 written notice requirement?

1. A paid job with a second employer
2. Serving as an officer of another company
3. A passive investment
4. Working as a paid independent contractor

9. A representative begins duties requiring a different registration category. What controls the required registration?

1. The person's functions and responsibilities
2. The person's highest college qualification
3. The number of customers at the branch
4. The amount of commissions earned last year

10. A candidate passes the SIE but no representative qualification exam. What does the SIE result permit by itself?

1. Registration to sell mutual fund shares
2. No registration to conduct securities business
3. Registration to solicit stock transactions
4. Registration to supervise branch sales staff

11. A registered representative changes to a role requiring another representative category. Which exam is generally needed?

1. The SIE again before the additional exam
2. Every principal exam before the transfer
3. The appropriate additional qualification exam
4. No additional exam for any registered person

12. Which employee fits the exemption for solely clerical or ministerial functions?

1. An employee who regularly accepts trade orders
2. An employee who recommends mutual fund shares
3. An employee who solicits prospective investors
4. An employee who only files completed records

13. An unregistered assistant occasionally writes down an order when the representative is unavailable. What is required before entry?

1. The registered person confirms it with the customer
2. The assistant checks that the customer has funds
3. The branch receptionist initials the order ticket
4. The customer waits until the monthly statement

14. When must a firm investigate a registration applicant's character, reputation, qualifications and experience?

1. Only after the first customer complaint
2. Before applying to register the applicant
3. Only after the applicant passes an exam
4. At the first annual compliance meeting

15. A firm applies to register someone previously registered at another broker-dealer. What document must it review within 60 days or show reasonable efforts to obtain?

1. The previous firm's full tax return and schedules
2. The applicant's college transcript and diploma
3. The most recent Form U5 and amendments
4. The previous firm's annual report and audit

16. By when must a firm's procedures provide for verification of an initial or transfer Form U4's accuracy and completeness?

1. Within 90 calendar days after filing
2. At the next annual registration renewal
3. At the next branch inspection cycle
4. Within 30 calendar days after filing

17. Which form establishes an individual's securities-industry registration or transfer?

1. Form U4
2. Form U5
3. Form BD
4. Form ADV

18. A firm enables Allow Rep Edits in a draft Form U4. What can the representative do?

1. Submit the filing to regulators
2. Edit the draft for firm review
3. Approve the firm's registrations
4. Eliminate all disclosure questions

19. A representative voluntarily leaves a broker-dealer. By when must the firm generally file Form U5?

1. Within 60 days of the next calendar quarter
2. Only after employment with another firm begins
3. Within 30 days of the employment end date
4. Only after the representative requests removal

20. After filing a Form U5, a firm learns new reportable information about an unresolved Section 7 matter. What must it do?

1. Leave the original disclosure permanently unchanged
2. Wait for a new employer to file another Form U4
3. Delete the original form from the individual's record
4. Amend the disclosure through final disposition

21. An applicant was charged with a felony but has not been convicted. What does Form U4 ask the applicant to disclose?

1. The felony charge
2. Only a later guilty verdict
3. Only a securities-related charge
4. Only a charge involving a customer

22. An applicant filed a personal bankruptcy petition six years ago. How is that treated under Form U4 question 14K?

1. It is excluded because five years have passed
2. It falls within the ten-year disclosure period
3. It is excluded if unrelated to securities trading
4. It is reportable only after a creditor complains

23. Which personal financial condition is expressly asked about in Form U4 question 14M?

1. A mortgage paid according to its terms
2. A current credit card paid by its due date
3. Unsatisfied judgments or liens
4. An installment loan with no missed payment

24. A person first registers with FINRA in June 2026. When is the first Regulatory Element normally due?

1. December 31, 2026
2. June 30, 2028
3. June 30, 2029
4. December 31, 2027

25. A representative holds two registration categories requiring Regulatory Element content. Which content must be completed?

1. The content for each category held
2. Only the content for the oldest category
3. Only the content for the newest category
4. Either category at the representative's option

26. A representative becomes CE inactive after missing the required Regulatory Element deadline. What must happen?

1. Sales may continue with customer permission
2. Activities requiring registration must stop
3. Sales may continue until the next exam date
4. Only opening new accounts must stop

27. What is a broker-dealer expected to use when administering its Firm Element program?

1. A single permanent plan without annual review
2. An optional survey replacing all required training
3. Annual needs analysis and a written training plan
4. A customer vote on which employees need training

28. Which description fits the required focus of a firm's Firm Element program?

1. Only the steps for filing a new firm registration
2. Only topics on the employee's last qualification exam
3. Only the mechanics of submitting annual renewal fees
4. Professional responsibility and the registered person's role

29. Under the rules in effect in November 2026, a representative plans paid bookkeeping work outside the firm. What notice is required?

1. Prior written notice to the member firm
2. Verbal notice after the first payment arrives
3. Written notice only to existing brokerage clients
4. No notice unless the work involves securities

30. Which activity is expressly exempted from Rule 3270's outside-business notice requirement?

1. A paid outside consulting role
2. A passive investment
3. An outside corporate officer role
4. A paid independent-contractor job

31. After receiving outside-business notice, what must the member consider?

1. Whether the activity guarantees the employee a profit
2. Whether the employee prefers different working hours
3. Interference with duties and apparent firm affiliation
4. Whether customers have waived all firm supervision

32. A person reports a private securities transaction with no selling compensation. What response does Rule 3280 require from the firm?

1. An automatic prohibition of all such transactions
2. An automatic approval to receive later commissions
3. A mandatory payment to the person for the notice
4. Prompt written acknowledgment of the notice

33. A representative learns that a registration filing contains misleading information. Which action satisfies the filing rule?

1. Correcting the inaccurate or incomplete filing
2. Leaving it until the representative changes employers
3. Telling customers the filing should be disregarded
4. Keeping it if the mistake did not affect commissions

34. An applicant was convicted of a non-securities felony three years ago. What is the general statutory-disqualification consequence?

1. Only securities felonies can disqualify
2. The conviction is a disqualifying event
3. Only a current prison sentence can disqualify
4. The SIE result automatically clears the conviction

35. Which disciplinary status appears in FINRA's list of disqualifying events?

1. A routine change of residential address
2. A voluntary transfer to another employer
3. A current SRO bar from association
4. A missed voluntary financial-planning seminar

36. Which application does a member use to sponsor association of a statutorily disqualified individual?

1. Form MC-400A
2. Form ADV-W
3. Form 13F
4. Form MC-400

37. Absent an exception, what happens if fingerprint information is not submitted within 30 days after FINRA receives the electronic Form U4?

1. The registration is deemed inactive
2. The registration becomes permanently unrestricted
3. The applicant receives a principal registration
4. The firm may substitute its annual audit report

38. A representative refuses to acknowledge a required Form U4 disclosure amendment. What must the firm do?

1. Wait indefinitely for the representative's consent
2. File known disclosure information despite the refusal
3. Replace the disclosure with the representative's objection
4. Omit the matter if the representative pays a filing fee

39. When asking an associated person to sign or acknowledge Form U4, what must the member provide?

1. A guarantee that every dispute will go to court
2. A promise that arbitration awards can always be appealed
3. The required written arbitration disclosure
4. A waiver eliminating the firm's disclosure obligations

40. An MFP is entitled to vote for a covered municipal official. What aggregate per-election contribution meets G-37's voting-right de minimis exception?

1. $300 or less
2. $500 or less
3. $1,000 or less
4. $250 or less

41. An MFP makes a contribution that triggers G-37's business ban, and no exception or exemption applies. What is the normal ban period?

1. Two years from the contribution
2. One year from the next election
3. Six months from the next filing
4. Five years from the hiring date

42. Under the rule in effect in November 2026, what is the ordinary annual gift limit for one employee of another firm when related to that employer's business?

1. $100
2. $300
3. $250
4. $500

43. Several representatives at one member give covered business gifts to the same recipient. How is the annual gift limit applied?

1. Apply a separate limit to each representative giving gifts
2. Apply a fresh limit to every individual business meeting
3. Aggregate gifts from the firm and its associated persons
4. Exclude gifts if the recipient keeps the amounts confidential