Finra Exam Series-6 Topic 7 Question 73 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 73
Topic #: 7

Chandler is a registered representative with GetErDone Broker-Dealers, a FINRA member-firm. His friend, Phoebe, is employed by FlyByNight Investments, which is not a member of FINRA, or any other securities association for that matter. Given these facts:

AIf Chandler executes any transactions for Phoebe, he is required to charge her the same commission that he charges any member of the general public.

BChandler is prohibited from engaging in any financial transactions with Phoebe.

CChandler is prohibited from splitting any commissions with Phoebe.

DBoth A and C are true.

Show Suggested Answer

Suggested Answer: D

Given that Chandler is a representative with a member firm while Phoebe's employer is not a member of any known securities association, he is required to charge Phoebe the same commission that he charges any member of the general public when executing a transaction for her and is prohibited from splitting commissions with her. He is not prohibited from engaging in any financial transactions with her; he simply must do so ''for the same commissions or fees, and on the same terms and conditions as are. . .accorded to the general public,'' according to FINRA.

by Daron at Mar 21, 2024, 12:38 PM

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Martha

5 months ago

I see your point, Justine. But in this case, it seems like as long as Chandler follows the rules of charging the same commission and not splitting commissions, he should be okay.

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Justine

5 months ago

But what about option B? Couldn't Chandler be prohibited from engaging in any financial transactions with Phoebe altogether?

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Jose

5 months ago

I agree with Martha, D makes the most sense. It's important for Chandler to follow the regulations when dealing with non-FINRA members like Phoebe.

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Martha

5 months ago

I think the answer is D, because if Chandler charges Phoebe the same commission as the general public and doesn't split commissions with her, that would comply with the rules.

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