The go-to guide to acing the Series 99 Exam!
Passing the Operations Professional Qualification Exam (Series 99) qualifies an individual to perform a variety of operations functions in support of a broker-dealer. The exam covers the broker-dealer business at a fundamental level, standard operations functions, investor protection and market integrity regulations, identifying and escalating regulatory red-flag issues to the appropriate person in a firm, and professional conduct and ethical standards. There are no prerequisites for the Series 99 Exam, but all candidates must be sponsored by a FINRA member firm.
Created by the experts at The Securities Institute of America, Inc., Wiley Series 99 Exam Review 2020 arms you with everything you need to pass this challenging 100-question test. Designed to help you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you're prepared mentally and strategically to take the test, it provides:
- Dozens of examples
- Assorted practice questions for each subject area covered in the exam
- Priceless test-taking tips and strategies
- Helpful hints on how to study for the test, manage stress, and stay focused
Wiley Series 99 Exam Review 2020 is your ticket to passing the Series 99 test on the first try - with flying colors!
Table of Contents
About the Series 99 Exam xiii
About this Book xvi
About the Test Bank xvii
About the Securities Institute of America xviii
Chapter 1 Equity and Debt Securities 1
What is a Security? 1
Capitalization 2
Common Stock 3
Preferred Stock 9
Types of Dividends 12
Rights 13
Warrants 14
Options 15
American Depositary Receipts (ADRs)/American Depositary Shares (ADSs) 20
Debt Securities/Bonds 21
The Money Market 36
Limited Partnerships 38
Pretest 45
Chapter 2 Brokerage Office Procedures and Back-Office Operations 49
Hiring New Employees 49
Resignation of a Registered Representative 50
Registration Exemptions 51
Persons Ineligible to Register 52
Disciplinary Actions Against a Registered Representative 53
Termination for Cause 54
Outside Employment 54
Private Securities Transactions 55
Gift Rule 55
Sharing in a Customer’s Account 56
Borrowing and Lending Money 56
Order Tickets 57
Executing an Order 57
Becoming a Stockholder 59
Clearly Erroneous Reports 60
Execution Errors 61
Unconfirmed Trades 62
Corporate and Municipal Securities Settlement Options 62
When-Issued Securities 64
Government Securities Settlement Options 65
Accrued Interest 65
Close Outs 66
Customer Confirmations 67
Rules for Good Delivery 68
Rejection of Delivery 70
Reclamation 70
Marking to the Market 71
Customer Account Statements 71
Dividend Distribution 72
Proxies 74
Operations Professionals Covered Persons 75
Operational Red Flags 76
Pretest 77
Chapter 3 Record Keeping, Financial Requirements, and Clearing 81
Blotters 81
General Ledger 82
Customer Accounts 82
Suspense Account 82
Subsidiary (Secondary) Records 82
Securities Position Book (Ledger) Stock Record 83
Order Tickets 83
Confirmations and Notices 83
Monthly Trial Balances and Net Capital Computations 83
Employment Applications 83
Records Required to Be Maintained for 3 Years 84
Records Required to Be Maintained for 6 Years 84
Records Required to Be Maintained for the Life of the Firm 84
Requirement to Prepare and Maintain Records Under SEC 17a-3 and 17a-4 86
Financial Requirements 87
Box Counts 89
Missing and Lost Securities 90
The Customer Protection Rule 91
FINRA Financial Requirements 94
Fidelity Bonds 95
Carrying of Customer Accounts 96
The Depository Trust & Clearing Corporation (DTCC) 97
The Fixed Income Clearing Corporation (FICC) 99
The Option Clearing Corporation (OCC) 99
American vs. European Exercise 100
Expiration and Exercise 100
Pretest 101
Chapter 4 Issuing Corporate Securities 105
The Prospectus 106
The Final Prospectus 106
Prospectus to Be Provided to Aftermarket Purchasers 107
SEC Disclaimer 108
Misrepresentations 108
Tombstone Ads 108
Free Riding and Withholding/FINRA Rule 5130 109
Underwriting Corporate Securities 110
Types of Underwriting Commitments 111
Types of Offerings 113
Exempt Securities 115
Exempt Transactions 115
Rule 137 Nonparticipants 123
Rule 138 Nonequivalent Securities 123
Rule 139 Issuing Research Reports 123
Rule 415 Shelf Registration 124
Securities Offering Reform Rules 124
SEC Rule 405 125
Additional Communication Rules 126
Crowdfunding 127
Pretest 129
Chapter 5 Trading Securities 133
Types of Orders 133
The Exchanges 137
The Role of the Designated Market Maker 138
Crossing Stock 141
Do Not Reduce (DNR) 141
Adjustments for Stock Splits 142
Super Display Book (SDBK) 142
Short Sales 143
Threshold Securities 146
Over the Counter/Nasdaq 147
Electronic Communication Networks (ECNs) 150
Non-Nasdaq OTC Bulletin Board 151
Pink OTC Market 151
Third Market 152
Fourth Market 152
The Order Audit Trail System (OATS) 153
Broker vs. Dealer 153
FINRA’s 5% Markup Policy 154
Markups/Markdowns When Acting as a Principal 155
Riskless Principal Transactions 155
Net Transactions with Customers 156
Proceeds Transactions 156
Firm Quote Rule 157
Trade Complaints Between Members 157
Pretest 159
Chapter 6 General Supervision 163
The Role of the Principal 163
Continuing Education 165
Tape Recording Employees 167
Heightened Supervisory Requirements 167
Information Obtained from an Issuer 168
Customer Complaints 168
Investor Information 169
Member Offices 169
Annual Compliance Review 171
Business Continuity Plan 171
Currency Transactions 172
The Patriot Act 172
Identity Theft 174
Pretest 175
Chapter 7 Customer Accounts 179
Opening a New Customer Account 179
Holding Securities 181
Mailing Instructions 183
Types of Ownership 183
Death of a Customer 184
Partnership Accounts 185
Trusts 185
Corporate Accounts 186
Trading Authorization 186
Accounts for Employees of Other Broker Dealers 191
Numbered Accounts 191
Prime Brokerage Accounts 191
Account Transfers 192
Bulk Account Transfers 193
Margin Accounts 194
Guaranteeing a Customer’s Account 196
Day Trading Accounts 196
Commingling Customer’s Pledged Securities 196
Wrap Account 197
Regulation S-P 197
Pretest 201
Chapter 8 Margin Accounts 205
Regulation of Credit 205
House Rules 208
Establishing a Long Position in a Margin Account 208
Establishing a Short Position in a Margin Account 214
Margin Requirements for Day Trading 218
Combined Margin Accounts 219
Portfolio Margin Accounts 220
Securities Backed Lines of Credit 221
Minimum Margin for Leveraged ETFs 221
Pretest 223
Chapter 9 Investment Companies 227
Investment Company Philosophy 227
Types of Investment Companies 228
Investment Company Registration 230
Investment Company Components 232
Mutual Fund Distribution 235
Distribution of Mutual Fund Shares 236
Mutual Fund Prospectus 236
Additional Disclosures by a Mutual Fund 238
Anti-Reciprocal Rule 238
Money Market Funds 239
Valuing Mutual Fund Shares 239
Mutual Fund Sales Charges 239
Sales Charge Reductions 241
Voting Rights 245
Portfolio Turnover 246
Recommending Mutual Funds 246
Exchange Traded Funds/ETFs 247
Exchange Traded Notes/ETNs 247
ETFs That Track Alternatively Weighted Indexes 247
Alternative Funds 248
Floating Rate Bank Loan Funds 248
Structured Retail Products/SRPs 249
Pretest 251
Chapter 10 Variable Annuities and Retirement Plans 255
Annuities 255
Recommending Variable Annuities 259
Retirement Plans 264
ERISA 404C Safe Harbor 278
Department of Labor Fiduciary Rules 278
Health Savings Accounts 279
Pretest 281
Chapter 11 Securities Industry Rules and Regulations 285
The Securities Exchange Act of 1934 285
Becoming a Member of FINRA 289
Registration of Agents/Associated Persons 290
State Registration 291
Retail Communications/Communications with the Public 291
Securities Investor Protection Corporation Act of 1970 296
The Securities Acts Amendments of 1975 297
The Insider Trading and Securities Fraud Enforcement Act of 1988 298
Firewalls 298
Telemarketing Rules 299
The Penny Stock Cold Call Rule 300
Violations and Complaints 301
Political Contributions 305
Investment Adviser Registration 306
Investment Adviser Representatives 308
Investment Adviser Advertising and Sales Literature 309
Soft Dollars 310
The Uniform Securities Act 312
Pretest 313
Answer Keys 317
Glossary of Exam Terms 325
Index 391
