The cheat sheet

MSRB writes municipal rules, enforces none; Bank dealer's MSRB violation: bank regulator enforces; "SEC approved" is never accurate: say effective

OCC here: Options Clearing Corp.; 5250: underwriting yes, a quote never; Accredited: one test alone qualifies

Common trap: The MSRB enforces the municipal rules it writes. Correct: It writes them. FINRA or a bank regulator enforces them. Writer and enforcer are two different questions.

Common trap: A registered offering means the SEC approved it. Correct: The SEC never approves. Saying otherwise is itself unlawful. Say effective, never approved.

SEC: federal securities laws | cannot approve a security (Securities Act Section 23) | Securities Exchange Act of 1934 | 1934; Federal Reserve: monetary policy, Regulation T | cannot set fiscal policy | no SIE statute; its rule is 12 CFR Part 220 | 50% floor, §220.12(a); Treasury / IRS: tax treatment, Treasury debt | cannot write securities conduct rules | no SIE statute | no SIE number; FinCEN: receives Bank Secrecy Act filings | not a securities regulator | Bank Secrecy Act | no SIE number; OFAC: sanctions programs and the SDN list | cannot discipline a broker-dealer | no SIE statute | no SIE number; FINRA: broker-dealers and their people | not a government agency; no advisers, no banks | Exchange Act Section 15A | 3 rules: 2266, 2269, 5250; MSRB: writes municipal rules | cannot examine or enforce | no SIE statute | 3 rules: G-11, G-32, G-34; CBOE: standardized options | cannot clear or guarantee a contract (that is the Options Clearing Corporation) | no SIE statute | no SIE number

SIPC: $500,000, $250,000 cash, custody only; FDIC: $250,000 per bank, deposits only; Rule 2266: written SIPC notice, annually

Common trap: SIPC will cover me if my stock goes down. Correct: SIPC protects cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm, up to $500,000 total with a $250,000 limit for cash. In SIPC's own words it does not protect against a “decline in value of your securities”. Hunt the stem for 'failed' or 'insolvent'. No failed firm, no SIPC. A stem that only says the stock dropped is testing this exact trap.

Common trap: SIPC covers losses when your stock drops in value. Correct: SIPC covers custody loss at a failed member firm only. A falling stock is never a SIPC claim.

Common trap: FINRA or the SEC wrote Regulation T. Correct: The Federal Reserve Board of Governors wrote it. Subject and author are not the same clue.

5250: pay for underwriting, never for a quote; Custodian holds it; transfer agent records it; OCC here = Options Clearing Corporation

Common trap: An issuer may pay a firm for a favorable quote. Correct: 5250 bars that payment, even while permitting paid underwriting. Underwriting: yes. A quote: never.

Common trap: OCC here means the Comptroller of the Currency. Correct: The outline places OCC under depositories: the Options Clearing Corporation. The section is the clue.

"Secondary distribution": an offering, not a trade; Dark pool: undisplayed ATS, inside secondary; No fifth market type on this outline

Common trap: A secondary distribution is just a secondary-market trade. Correct: It's a large holder's fixed-price offering of registered shares. Distribution means offering, not routine trading.

Discount rate: set directly, by the Board; Fed funds rate: a target range, not a number; Prime rate: set by commercial banks

Open market operations: the FOMC; Discount rate: Reserve Bank boards, Board reviews; Fed funds rate: banks lending to each other; Taxes and spending: Congress

Common trap: The Board of Governors alone runs open market operations. Correct: The FOMC does: the Fed's own page says so directly. The committee, not the Board alone.

Common trap: The FOMC sets the fed funds rate directly. Correct: It sets a target RANGE and steers the market into it. Fed funds: a range. Discount: a set number.

Common trap: The FOMC sets every rate the Fed has. Correct: The FOMC owns open market operations. Different rate, different body. Name the owner.

Keynesian: spending. Monetarist: money supply; Balance sheet: a snapshot. Income: a period; GDP: where. GNP: who

Leading: moves before the turn; Coincident: moves with it; Lagging: confirms it afterwards; Inflation indicators are their own category

Common trap: Leading and lagging indicators are roughly the same idea. Correct: Leading predicts the turn. Lagging only confirms it after. Predicts, or confirms: pick one.

Common trap: Anything about unemployment is lagging. Correct: New claims lead. Duration lags. Ask when the number moves, not what it is about.

Nothing that offers the security may go out: Securities Act §5(c); The underwriter does due diligence, never selling; 20th day after filing, or earlier if the SEC accelerates; an amendment restarts it: §8(a); Out: Rule 430 red herring · Rule 134 tombstone · indications of interest; Not out: any sale, any money, the final prospectus; Rule 15c2-8(b): red herring 48 hours before the confirmation; It may be sold: and nobody approved it. §23; Item 501(b)(7) legend; Final prospectus accompanies or precedes the security: §5(b)(2)

504's dollar cap is rarely the real issue; 506(b)'s 35-buyer count usually is; 2269 notice: at or before completion

504: $10M, rolling 12 months; 506(b): no ads, 35/90 days. 506(c): ads, verified; 144: 6 or 12 months, then a volume cap

506(b): no ads, 35 non-accredited; 506(c): ads, verified; 144: 1 year if not reporting; Home comes out first

Common trap: The tombstone goes out first to build interest, then the registration statement is filed, then the red herring is sent to the people who responded. Correct: Nothing goes out before the filing. Securities Act Section 5(c) makes it unlawful to offer to sell or offer to buy before a registration statement has been filed. The red herring and the tombstone both belong to the cooling-off period: after the filing, before the effective date. Order the stem by clock, not by importance: filed → 20 days under Section 8(a), earlier if accelerated, restarted by an amendment → effective → delivery. Anything a stem places before "filed" is the trap.

Common trap: Start doing arithmetic as soon as a number appears. Correct: Sort the fact pattern into one of the four terms first. Order first. Arithmetic second.

Common trap: They're the same rule, just renumbered. Correct: One trades no ads for a small allowance; the other, ads for verification. Solicitation is the axis that splits them.

Six months reporting, one year not; Volume: the greater of two tests; Rights below market, warrants above; One receipt is not one share

Outstanding = issued − treasury. Treasury neither votes nor counts for quorum: DGCL §160(c); Statutory: your share count per seat. Cumulative: shares × seats, poolable: and it favours the MINORITY; No pre-emptive right unless the certificate of incorporation expressly grants it: DGCL §102(b)(3); Secured → priority unsecured → general unsecured (incl. plain debentures) → subordinated debentures → preferred → common; Every debt claim, subordinated included, outranks every share; Holding period: 6 months reporting issuer, 1 year non-reporting: Rule 144(d); Volume: the GREATEST of 1% of outstanding or the 4-week average weekly volume: Rule 144(e); Form 144: above 5,000 shares OR $50,000 in any three months: Rule 144(h)

Straight: missed dividend gone. Cumulative: arrears gate the common: DGCL §151(c); Participating: takes its rate AND shares beyond. Convertible: §151(e). Callable: §151(b); Fixed dividend → rate-sensitive like a bond. Voting is whatever §151(a) lets the charter say; Right: weeks, struck BELOW market, to existing shareholders; Warrant: years, struck ABOVE market, stapled to a bond as a sweetener; Both are DGCL §157(a) "rights or options": the statute never says "warrant"; A U.S. bank holds the foreign share; you hold a certificate on an interest in it; Sponsored = company agreed with the bank. Unsponsored = set up without the company

Common trap: Cumulative voting helps the largest shareholder, because pooling votes gives the biggest holder the most concentrated power. Correct: Cumulative voting favours the MINORITY holder. It is the only mechanism by which a holder too small to win any seat under statutory voting can concentrate her votes and compete for one at all. Ask what the option is worth to each holder, not who owns more votes: and note that how many seats are up decides how far a given stake actually gets. Then check the charter: DGCL §214 says a certificate of incorporation "may provide" for cumulative voting. No charter provision, no cumulative voting.

Common trap: Rights and warrants are the same instrument on different timescales: a right is just a short-dated warrant. Correct: They differ on TWO axes at once. A right is short-dated with an exercise price typically BELOW the market. A warrant is long-dated with an exercise price typically ABOVE the market at issue. Either axis alone classifies it. Struck below the market, or measured in weeks → right. Struck above the market, or measured in years, or attached to a bond → warrant.

Pass-through: pro rata, one pool; Obligation: classes, in order; Rates fall, principal early; Rates rise, principal late

Issuer: call, sinking fund; Investor: put, conversion; Baa or BBB and above: investment grade; Below: high yield

What goes wrong first?; Rates, prepayment, credit; The branch kills two; Before you finish

Paper: unsecured, discount basis; Acceptance: a bank's credit on a deal; CD: insured $250,000; Eurodollar not; Repo: a loan against collateral

Federal: exempt, follows the bond; State: usually in-state only; AMT: private activity may be caught; $5,000 is the ordinary piece

Secured yields less than unsecured; Issuer: call and sinking fund; Investor: put; Baa or BBB and above is investment grade

Paper: unsecured, 360-day discount; Eurodollar CD: not insured; Fed funds: unsecured, overnight

Nominal, current, to maturity, to call; Exactly reversed, to call lowest

Gross up: divide by (1 - rate); Net down: multiply by (1 - rate); Grossed up is bigger; netted down is smaller

Bill: 4–52wk, no coupon, discount or par; Note 2–10y / Bond 20–30y: coupon every 6mo; TIPS 5/10/30y: principal adjusts, floored at par; STRIPS: zero-coupon, via dealers only; Non-competitive: first, in full, $10M cap; Competitive: 35% cap, less net long position; Single price, at the high yield; State/local tax exempt; federal tax still due

Coupon and nominal yield: fixed at issue; Price moves opposite to rates; Discount: nominal, then current, then YTM; Premium: the same ladder, descending

Treasury: federally taxable, state exempt; Municipal: not federally taxable, if after 1953; Corporate: taxable at both levels; GO vs revenue is backing, not tax

Common trap: Agency in the stem means government-guaranteed. Correct: Only Ginnie Mae's paper carries full faith and credit. Read the issuer, not the label.

Common trap: Prepayment only shortens the bond. Correct: Rates fall, principal early. Rates rise, principal late. Ask the direction before you answer.

Common trap: More security must mean more income. Correct: Secured bonds yield less than comparable unsecured bonds. Safety costs you coupon.

Common trap: Being repaid early is good news. Correct: Issuers call when rates have fallen, so you reinvest lower. Ask which way the market moved.

Common trap: Two different products. Correct: One transaction seen from each side. Ask which side you were given.

Common trap: Full faith and credit means the U.S. government. Correct: For a municipal bond it means the issuer's own tax base. Ask whose credit is pledged.

Common trap: Municipal interest is exempt from all three taxes. Correct: State and local exemption usually needs an in-state bond. Ask where the buyer lives.

Common trap: Learn the discount order and apply it. Correct: Ask whether par is above or below your price. Derive the order, never recall it.

Common trap: Muni yield times one minus the rate. Correct: Muni yield divided by one minus the rate. The answer must be bigger.

Common trap: Filled first means priced better. Correct: It's a single-price auction: everyone pays the same clearing price. Certainty of fill, not a better rate.

Common trap: Rates rose, so the coupon rises too. Correct: The coupon is fixed. The price does the moving. Cross out any choice that changes the coupon.

Common trap: Government paper is tax-free, full stop. Correct: Treasury: federal yes, state no. Muni: the reverse. Name the issuer, then apply that issuer's exemption.

ODD: at or prior to account approval; Expiry: in the money, exercised automatically; Contrary instructions must be given

Call in the money: strike below stock; Put in the money: strike above stock; At the money: they are equal; Intrinsic: the amount in the money; Time value: everything else

Holder max loss: the premium; Writer max gain: the premium; Naked call: unlimited; Naked put: the strike price

Long: right to sell, gain capped at strike; Long: loses the premium at most; Short: duty to buy, gains the premium; Short: loses the strike less premium; Both cross at strike minus premium

The bend sits at the strike; One end flat at the premium; The other end slopes dollar for dollar; Call crossing: strike plus premium; Put crossing: strike minus premium

Covered: same account, unit for unit; Only the naked call is unlimited; Equity options: assignment any day; In the money at expiry: exercised

Buyer, call or put: the premium paid; Uncovered call writer: unlimited; Uncovered put writer: (strike - premium) x 100; Writer's maximum gain: the premium

Call breakeven: strike + premium; Put breakeven: strike - premium; Both sides of one contract share it; The premium is per share; x100 per contract

Call in the money: strike below stock; Put in the money: strike above stock; Intrinsic: how far in the money; Profit: intrinsic minus the premium paid

Common trap: I will buy the contract back before assignment. Correct: Assignment can happen at any time. Watch the day before ex-dividend.

Common trap: In the money means the stock is above the strike. Correct: That is only the call rule. Name the type first.

Common trap: The position is $3 ahead. Correct: That is one share of a hundred. Write times 100 before reading choices.

Common trap: Any short option position is unlimited-risk. Correct: Only the uncovered short call is. Find the box before you agree.

Common trap: The number on the axis is the profit. Correct: It is the profit on one share of a hundred. Shape here, arithmetic in 033.

Common trap: Both naked positions are unlimited risk. Correct: Only the naked CALL is unlimited. A stock cannot fall below zero. It can rise forever.

Common trap: Subtract the premium from every strike. Correct: Call: strike + premium. Put: strike - premium. Derive it: which way must the stock move to pay you back?

Common trap: In the money means the trade made money. Correct: In the money only places strike against stock. Profit needs the premium. Moneyness never does.

Accumulation: what is already owned; Letter of intent: usually thirteen months; Broken letter: charges deducted retroactively; Rule 2342: selling just below is prohibited

Open-end: priced at the next NAV; Closed-end: priced by supply and demand; UIT: no board, no adviser, fixed portfolio; UIT: a termination date set at the start

A: front-end, and the breakpoints; B and C: asset-based, maybe deferred; Aggregate cap: 8.5% of the offering price; No load: under 0.25% a year

Cost rises with restriction: loads, or 2% + 20%; Illiquidity trades for a tax or return benefit; Four questions, every product: regulator, liquid?, fee, buyer; Closes Section 2C: Packaged Products

Deferred, then ordinary income rates; Withdrawals take income first; Before 59 and a half: a 10% penalty; Rule 2330: seven business days

Prepaid: locks tuition price; Savings: market risk, no guarantee; ABLE: disability-related expenses; Direct-sold: no broker; MSRB writes the rules

ROA: same-family holdings, current value; Split trades to dodge a breakpoint: Rule 2342; Variable annuity: tracks investments (Rule 2330); Class A: front load; Class B: back load; Class C: level load

Common trap: Selling just below a breakpoint is poor service. Correct: Rule 2342 prohibits it outright. The defence is documented in advance.

Common trap: The three types are open-end, closed-end and UIT. Correct: They are face-amount certificate, UIT and management. Ask which level is being asked about.

Common trap: Offering price is the value plus the charge. Correct: The charge is a percent of the offering price. Divide, then check the load.

Common trap: Registered products are automatically safe and liquid. Correct: Registration means disclosure. Liquidity is a separate fact. Regulated isn't a risk rating.

Common trap: The money comes out of an annuity tax-free. Correct: It is deferred, taxed at ordinary rates, income first. Ask when, not whether.

ABLE: disability expenses, same category; LGIP: pooled cash, excluded from G-45; Qualified withdrawals: federal tax-free; Nonqualified: ordinary income tax + penalty

Common trap: The student decides how the 529 is invested and spent. Correct: The account owner controls it and can change the beneficiary. Owner controls. Beneficiary receives.

Common trap: A 529 invests in mutual funds, so it is one. Correct: The plan is a municipal fund security, not the funds inside it. Wrapper, not holdings.

Fees: 2% management + 20% performance; 3(c)(1): caps owners at 100; ETF creation: AP delivers securities in-kind; Most ETFs: passive, low-cost

TIC: direct, undivided property interest; Both structures: pass-through, generally illiquid; TIC: selling can need unanimous consent; Suitability: benefit AND net worth to bear risk

Common trap: Wanting the tax write-off is enough to recommend a DPP. Correct: The client also needs net worth to withstand the risk. Benefit AND net worth.

Common trap: A DPP can be sold quickly if cash is needed. Correct: DPPs are generally illiquid, with no secondary market. No ready buyer, not a slow one.

Private: unregistered, no market; Registered non-listed: disclosed, still not exchange-traded; Listed: registered AND exchange-traded; Statement estimate is not a guaranteed sale price

Common trap: The estimated value on the statement is what a sale will produce. Correct: FINRA requires disclosure the sale price may be less. An estimate, not a quote.

Common trap: An SEC-registered REIT can always be sold easily, because it's registered. Correct: A registered non-listed REIT is disclosed but not exchange-traded, and stays illiquid. Registration is disclosure, not a market.

Accredited: $1M net worth or $200K/$300K income; Qualified purchaser: $5M individual, $25M entity; Fees: ~1-2% plus 15-20% of profits; Illiquid, often lock-up: same as private equity

Common trap: Accredited investor and qualified purchaser use the same dollar thresholds. Correct: Qualified purchaser requires $5M+ in investments: a much higher, different test. Read which word the question uses.

Common trap: A retail investor can join if determined enough. Correct: Both exemptions require meeting a legal investor standard first. Wanting in isn't qualifying.

ETN: issuer credit risk, on top of the index; Can lose value even if the index rises; Most ETFs: passive, low-cost; some active; Both: alternatives to mutual funds, intraday trading

Common trap: ETNs and ETFs are the same product. Correct: An ETN is issuer debt. An ETF is a fund holding real assets. Same trading, different claim.

Common trap: An ETN tracking a rising index cannot lose value. Correct: Credit risk can hurt an ETN's value regardless of the index. The issuer's promise is priced too.

Market risk: the most common dominant risk; Most rows carry two risks, not one; Closes Section 2D: Investment Risk; Section 2 complete: Products and Their Risks

Hedging: a priced, offsetting position; The only tool that reaches systematic risk; Always has a cost: never free; Structure, maintain, offset: three different jobs

Non-systematic: diversifiable. Market: not; Rebalancing: corrects allocation drift; A hedge always has a cost; It's "political," never "regulatory," risk

Interest rate/reinvestment: opposite directions, same pairing; Credit: one issuer. Market: everything together; Diversification reduces non-systematic risk only; Nine of ten risks are NOT reduced by diversifying

No buyer, any price: liquidity; Whole market together: market; One company's own news: non-systematic; Loan paid off early: prepayment

Common trap: A product carries exactly one dominant risk to identify. Correct: Most carry two: a corporate bond is credit AND interest rate risk. Look for the second risk.

Common trap: Diversification, rebalancing and hedging are interchangeable terms for reducing risk. Correct: Three different tools: a starting structure, an ongoing discipline, and a priced trade. Structure. Maintain. Offset.

Common trap: Hedging removes risk without any cost to the investor. Correct: A hedge always has a cost: a premium, or upside given up. Insurance is never free.

Common trap: Adding more holdings reduces every risk on the list. Correct: Diversification reduces non-systematic risk only. Systematic risk stays. One job, not ten.

Common trap: Falling interest rates carry no risk for a bond investor. Correct: Falling rates create reinvestment risk: reinvested coupons earn less. Both directions carry a cost.

Long: own it first, loss bounded at cost; Short: sell it first, loss unbounded; Covered short: shares borrowed before the sale; Naked short: sold without that arrangement

Stop: triggers a market order: fill can gap; Stop-limit: triggers a limit order: may not fill; GTC vs. Day: timing only, never price

Stop-limit: triggers, then becomes a limit order; Day: the default, expires end of trading day; GTC: stands until filled, canceled, or broker's cap

Bid buys, ask sells; gap is spread; Principal: own inventory, markup/markdown; Agent: the market, a commission; Naked short: no locate

Common trap: Principal and agency describe which side the customer is on. Correct: They describe the firm's role: inventory, or middleman. Ask: whose inventory, not whose order.

Common trap: Covered and naked mean the same thing everywhere. Correct: There: stock backed a writer's duty. Here: a borrow backs a sale. Same two words. Different position, entirely.

Common trap: A $43 stop always fills at exactly $43. Correct: Becomes a market order at $43; fills near $41. A stop price is a trigger, never a promise.

Common trap: Guarantees a fill at the stop price. Correct: Triggers there, but fills as a market order. Only a limit sets the fill price.

Ex-dividend = record date, since 5/28/2024; Dividend yield: dividends over price; Cost basis: FIFO default, average cost elective; Benchmarks: the comparison that matters

Tender offer: 20 business days min; Buyback harbor: 25% of ADV; Split changes count/price, never basis; Five lessons, one exam-weighted mix

Common trap: Ex-dividend sits one business day before record date. Correct: Since 2024, ex-dividend and record date are the same day. That gap closed with T+1.

Common trap: Average cost applies automatically unless you choose otherwise. Correct: FIFO is the IRS default; average cost is elective, for mutual funds. Elective, not automatic.

Book entry: broker-dealer/DTC nominee on record; Street name: broker-dealer tracks the real owner; Physical certificate: investor's own name, real fees/risk; Book entry carries no loss/theft risk

Common trap: The trade executes and settles at the same moment. Correct: Execution is on T; funds and securities move on T+1, regular way. Two different moments, one day apart.

Common trap: Holding a physical certificate protects the investor better than book entry. Correct: Book entry removes the risk paper carries. The paper is the risk, not the protection.

Tender offer: fixed price, cash, 20+ business days; Exchange offer: same idea, paid in stock; M&A: companies combine, shareholders vote

Shares: divide by second number; Price: multiply by second number; Basis/share: multiply by second number; Total basis: never changes, either way; Fixed on all eight problems here

Common trap: Splits, buybacks, rights all shrink your stake. Correct: A split leaves your stake unchanged; a buyback grows it. Ask: did MY share of the company change?

Common trap: 1-for-3 means splitting into 3 pieces, more shares. Correct: 1-for-3 is a reverse split: 1 new share for every 3 old. Read the ratio in order. New shares first.

Discretion: prior written authorization, named person; Time and price: no writing, that business day only; Trusted contact: 18+, and no trading authority

50% Reg T; 25% maintenance; $2,000 equity; CTR: over $10,000, 15 days; SAR: $5,000, 30 days, 60 at most; Records: 6, 3, 4, life of the firm

$2,000 minimum equity, capped at cost; 2264 disclosure: at opening, then yearly; Consent to lend must be written

529: owner may change beneficiary; UTMA: one minor, irrevocable; Tenants in common: unequal, to the estate; Trustee trades; resolution names the officer

Common trap: Any judgment by the rep makes the account discretionary. Correct: Only choosing security, amount, or side does. Time and price expires that same business day.

Common trap: Learn the numbers as a list. Correct: Learn each number with its trigger. Cash means CTR; suspicion means SAR.

Common trap: The firm must contact you before selling. Correct: It can sell without contacting you at all. And you do not pick which securities go.

Revocable: changeable; irrevocable: not; Either way, the trustee enters orders; UTMA: one minor, one custodian, irrevocable

First RMD: April 1 after turning 73; Later RMDs: December 31 each year; Early: extra 10%, unless an exception; Rollover 60 days / once; transfer unlimited

Common trap: A custodial account works like a 529. Correct: A 529 owner may change the beneficiary; UTMA cannot. Irrevocable is the word that separates them.

Common trap: Any second IRA move in a year breaks the rule. Correct: Only a second rollover does. Transfers are unlimited: the money never lands.

CIP: name, DOB, address, ID number; Beneficial owner: 25% plus one control person; OFAC: blocked or rejected, 10 business days; A SAR's existence is never disclosed

Core books: 6 years, 2 accessible; Confirmation at completion; statement quarterly; Calls: the customer's local clock; 25 or fewer: correspondence

CTR: cash over $10,000, 15 days; SAR: $5,000+ and suspicion, 30 days; Both are filed with FinCEN

CTR: 15 days after the day of the trade; SAR: 30 days from initial detection; 60 days only when no suspect is named

A SAR and its existence are confidential; The bar covers every employee and agent; It does not expire

Common trap: Only placement, layering, integration exists. Correct: The 2025 outline says structuring, layering, placement. Know both; structuring is a placement technique.

Common trap: Tell the customer a report was filed. Correct: A SAR and its existence are confidential. The prohibition binds every employee.

Common trap: Suspicion at $10,000; cash at $5,000. Correct: Cash over $10,000; suspicion at $5,000+. The CTR is a CURRENCY report. Read for cash.

Common trap: The 30 days runs from the transaction. Correct: It runs from initial detection of the facts. Two clocks, two starting events. Find the event.

Common trap: Say the account is under review. Correct: Say nothing that reveals a SAR exists. Softer words are the same disclosure.

Confirmation: at or before completion; Statement: every calendar quarter; Mail hold: 3 months, then a reason; Breach notice: within 30 days

Common trap: Convenience justifies a long mail hold. Correct: Past three months it needs a real reason. Safety or security qualifies; convenience does not.

Calls: 8am-9pm, their local time; 18 months customer; 3 months inquiry; Reg BI: disclosure, care, conflict, compliance; Form CRS: two pages maximum

Common trap: An 18-month relationship always permits the call. Correct: A do-not-call request still stops it. The firm-specific list beats the exception.

Common trap: Disclosure cures a conflict. Correct: It is one of four obligations, not a cure. Care and conflict obligations still apply.

5310 interpositioning: a paid-for middleman; Reg T freeriding: 90 calendar days; 2111 churning: turnover, cost-equity, in-and-out; 3260: unauthorised means no written discretion

Rumours: false information, no trade needed; Pump and dump: promote, then sell; 5230: paid publicity must be disclosed; 5210.03: display, fill, cancel

Churning: turnover, cost-equity, in-and-out; 5220: a quote not honoured; Nonpublic: undisseminated, not unknown; Firm: greater of $1m or 3x

Fake the price: 5210, 2020, 5230; Abuse the order: 5270, 5320, 5220, 5310; Breach a duty: 10b-5, 21A, 32(a); Take the money: 5130, 2150, 3240

Common trap: A firm may never trade alongside a customer order. Correct: Large and institutional orders have a carve-out. It needs an opt-in offer, not just notice.

Common trap: A big trade at the close is marking the close. Correct: Trading to set the printed price is. Ask what the trader wanted the print to do.

Common trap: Every period in Section 3 is counted the same way. Correct: Freeriding is calendar days; 2165 is business days. Read the unit before you read the number.

Civil: up to 3x profit or loss avoided; Firm: greater of $1m or 3x; Criminal: $5m and 20 years; $25m a firm; 20A: contemporaneous traders may sue

Common trap: No job at the company means no duty to anyone. Correct: A duty can run to the source of the information. 10b5-2: agreement, history, or close family.

2150(a): no improper use of funds; 2150(b): no guarantee against loss; 2150(c): two written approvals, proportional; 3240: procedures, then one of five conditions

Sharing: in proportion to money in; Second extension: 30 business; No notice to a suspected contact; 3250: a signed statement; 8210 binds

2040: no pay to the unregistered; 15(a): solicit or take an order, register; 4511(b): six years if nothing else says; 8210: you must answer FINRA

Common trap: Any relative of a registered person is restricted. Correct: Family plus support, that firm, or allocation control. Three triggers: ask which one the facts give you.

Common trap: The firm must freeze the account on suspicion. Correct: Rule 2165 says a member MAY place a hold. Its duties are notice, review and procedures.

Inactive: old trails only; Two years inactive: terminated; 2 years lapses rep, 4 lapses SIE; MQP holds it for five years

Investigate before filing; 60 days U5, 30 days U4; 17f-2: prints to the Attorney General; Relief: the member applies

SIE + top-off = registration; Permissive = fully registered; The firm must determine first; States license; money rules federal

SD defined by Exchange Act 3(a)(39); Prints to the Attorney General; RE: annually by 31 December; 2 years lapses rep, 4 lapses SIE

Common trap: Inactive just means paused until you finish it. Correct: Two consecutive years and it is terminated. Terminated means reapply: and requalify.

Common trap: Ten years pass and the conviction stops counting. Correct: Ten years back from filing: then forward, always. Date the application, not the offence.

Common trap: An assistant may take the order if the rep is out. Correct: Transcribe it; the rep confirms, then enters it. Occasional, unavailable, confirmed back.

Bankruptcy 10 yrs, bonds ever, liens now; 1122: misleading, or uncorrected; 4513 four years at the OSJ; BrokerCheck: no failed exams

3270 exempts passive investments; Approved and paid: books, supervision; Gifts aggregate per recipient; Political: two years, both rules

Common trap: Nothing to report: I was never convicted. Correct: Being charged with a felony is asked separately. The form says EVER; ten years is the SD test.

Outside: personal, bereavement, de minimis; Entertainment: no number, three tests; 2030: $350 voting, $150 not; G-37: $250 voting; two years either way

Notice always; approval if paid; Approved: firm's books and supervision; Unpaid: written acknowledgment; Compensation includes expenses

Common trap: The book is wrong, or the rule is wrong. Correct: The book is old. $100 ended 29 March 2026. Learn the number with its date attached.

Common trap: Every private securities transaction needs approval. Correct: Compensation turns acknowledgment into approval. Disapproved means no participation at all.