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Which of the following statements is true regarding the difference in treatment between common stock and preferred stock?
Step by Step Explanation:
Priority in Bankruptcy: Preferred stockholders have a higher claim on a company's assets than common stockholders during liquidation. Common stockholders are residual claimants.
Dividend Priority: Preferred stockholders are entitled to fixed dividends before common stockholders receive any dividends.
Incorrect Options:
A & B: Common and preferred stocks are treated differently in bankruptcy and dividend payments.
C: Common stock dividends are subordinate to preferred stock dividends.
SEC Guidance on Stockholder Rights: SEC Stock Rights.
A registered representative who is terminated from a broker-dealer must notify FINRA of a residential address change for what period of time after termination?
Step by Step Explanation:
FINRA Rule 1122: Requires that registered representatives update their residential address with FINRA for two years post-termination.
Purpose: This ensures accurate records for potential regulatory inquiries during the statutory two-year period when a terminated individual remains subject to FINRA's jurisdiction.
FINRA Rule 1122 (Filing False or Misleading Information): FINRA Rule 1122.
A broker-dealer (BD) creates a marketing postcard that includes a statement regarding FINRA's endorsement of the BD. Which of the following responses is true?
Step by Step Explanation:
FINRA Rule 2210: Firms are prohibited from suggesting or implying FINRA's endorsement or approval in any advertising materials.
Approvals: Even if a principal or FINRA approves the content, such a statement remains impermissible.
Key Point: FINRA's role is to regulate, not to endorse firms or their marketing.
FINRA Rule 2210 (Communications with the Public): FINRA Rule 2210.
A registered representative wants to open an account for himself at a different financial institution. Under FINRA rules, which of the following accounts requires prior written consent from his employing broker-dealer?
Step by Step Explanation:
FINRA Rule 3210: Requires registered representatives to obtain written consent from their employing broker-dealer before opening accounts at other financial institutions if securities transactions will occur.
Incorrect Options:
A, B, and C: These accounts are exempt because they do not involve direct securities transactions requiring monitoring.
FINRA Rule 3210 (Accounts at Other Institutions): FINRA Rule 3210.
Pursuant to the Securities Act of 1933, registration is required for which of the following securities?
The Securities Act of 1933 requires securities offered to the public to be registered with the SEC unless they qualify for an exemption. Open-end investment companies (mutual funds) are not exempt and must register.
D is correct because mutual funds are publicly offered and require registration.
A is incorrect because private placements are exempt under Regulation D.
B is incorrect because municipal securities are exempt under Section 3(a)(2).
C is incorrect because U.S. government securities are also exempt under Section 3(a)(2).
