The FINRA Series 99 exam is also known as the Operations Professional Exam. It assesses the ability of entry-level registered representatives to perform as operations professionals. Skills measured by this exam includes customer onboarding, financial control, delivery of securities, and disbursements of funds. Our free Series 99 practice exam will help with your test prep.
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Question 1 |
From an operational point of view and in accordance with applicable SRO/FINRA rules, meeting the minimum equity requirements for the opening of a day trading account can be done with:
The equity in the client’s personal account only | |
The combined equity in the client’s personal account and IRA account | |
The combined equity in personal as well as joint accounts with his/her spouse | |
The combined equity in sole ownership brokerage accounts at the member firm |
Question 1 Explanation:
One’s personal account equity may be used, but no other accounts.
Question 2 |
An operations manager needs to be mindful of the limited resources of clients who may wish to engage in day trading. The greatest concern is:
The ability, or lack thereof, of the client to incur losses inherent in any day trading activity | |
The client’s tax bracket | |
The client’s long term investment objectives | |
The client’s general lack of understanding of the intricacies of the stock market |
Question 2 Explanation:
The inherent risks of day trading mandate that the client be capable of complying with the immediate demands for additional equity where that occurs.
Question 3 |
Opening an account for a Hedge Fund requires each of the below except:
The names of the investors in the fund | |
The business format of the fund | |
The name of the fund and its principal address | |
The name or names of individuals with authority to trade on behalf of the fund |
Question 3 Explanation:
Who invests in the hedge fund is not information required by an SRO to open such an account.
Question 4 |
In processing requests for liquidation of securities in a joint account, one joint owner:
May enter liquidation orders and have a check made payable to that owner | |
May enter liquidation orders, but the check for payment must be in joint names | |
May not enter liquidation orders without consent of the joint owners | |
May enter liquidation market orders only |
Question 4 Explanation:
Absent a bona fide full power of attorney presented by one of the joint owners in the account, liquidation checks must be made out in the account name only, meaning in the names of both or all joint owners.
Question 5 |
Carrying broker/dealers must comply with which of the following under SRO rules when a customer wishes to transfer their account to another firm?
The transfer is required to be effected within one business day of receipt of the transfer request | |
The transfer is required to be effected within three business days of receipt of the transfer request | |
The transfer is required to be effected within three business days of validation of the transfer request | |
The transfer is required to be effected within one business day of validation of the transfer request |
Question 5 Explanation:
Validation is to occur within one business day; however, actual transfer of account will take place within three business days of validation.
Question 6 |
The back office of a member firm has been made aware that communications mailed to a client’s address of record have been returned to the firm by the US Post Office.
Have the RR of record write a personal email to the client inquiring what is going on | |
Have the BOM of the branch write a personal email to the client inquiring what is going on | |
Have the Compliance Office of the B/D attempt to contact the client personally to find out what is going on | |
Have the RR of record attempt to reach the client through any means possible, other than mail, to find out if there has been a change of address or other event of significance |
Question 6 Explanation:
In those instances in which mail sent to a customer is being returned undelivered, have the RR of record attempt to contact the client by means other than mail to determine if there has been a change of address or if the client may be impaired or otherwise unable to accept delivery by mail.
Question 7 |
When the minor in an UGMA account has reached majority and wishes to liquidate the assets in the account:
The firm must first obtain written authorization from the Custodian before releasing any assets to the former minor | |
The firm may release assets in the account upon presentation by the former minor of their birth certificate indicating they are now of the age of majority | |
The firm may liquidate assets in the account but must await an order from a court before releasing any assets from the account | |
Upon a showing of proper proof, a check made payable to the minor and Custodian may be provided to the former minor in the account |
Question 7 Explanation:
No liquidation proceeds will be released to the former minor until and unless a written authorization has been obtain by the firm from the Custodian of the UGMA account.
Question 8 |
When a customer transfers their account from one member firm to another, what records of that account must the firm losing the customer retain according to SRO and SEC rules?
Fails to deliver in that account | |
Fails to receive in that account | |
Both A and B | |
Customer account statements for that customer’s account |
Question 8 Explanation:
Fails to deliver and fails to receive records may or may not be retained by the former firm; however, Customer Statements are SRO and SEC retention requirements for a period of time as specified in the rules and regulations.
Question 9 |
On those occasions in which an RR offers to provide a client with a security which is different but very similar to the security the client has requested, the proper marking on the order ticket would be:
Unsolicited order | |
Solicited order | |
Discretionary order | |
Special terms and conditions order |
Question 9 Explanation:
Though not often, there are occasions in which the specific security a client wishes to purchase is not available. The RR may offer the client a security which is similar to the one requested, and where the client approves the recommended security, the order ticket must be marked "solicited."
Question 10 |
Your member firm has been notified by FINRA that it has become subject to the Taping Rule. This will impact the back office of the firm in what way?
Back office personnel are not subject to the taping rule | |
All RRs of the firm will have their communications subject to this rule | |
All personnel of the B/D will have their communications subject to this rule | |
All personnel of the B/D will be required to submit new fingerprint cards to the SRO |
Question 10 Explanation:
Absent unusual circumstances, back office employees are not subject to FINRA’s Taping Rule. However, all sales personnel become subject to the rule once it has been determined the B/D is subject to the rule.
Question 11 |
The requirements of the Do-Not-Call rules prohibit personnel of the B/D to contact individuals who are on which of the following lists?
FINRA’s do not call list | |
SEC’s do not call list | |
The national do not call registry | |
Any of the above |
Question 11 Explanation:
FINRA and/or the SEC do not have Do Not Call lists. The B/D will have its own list, and there is of course a National Do Not Call Registry with which the firm must comply.
Question 12 |
When as and if a RR has place an order for a client out of the wrong account of the client, which of the below will be the proper procedure?
Request a cancel and re-bill with principal approval | |
Cancel the order | |
Request a cancel and re-bill with no principal approval required | |
Make no changes and run the order as presented |
Question 12 Explanation:
A cancellation of the order followed by a correct re-bill will be required to fix the mistake, but principal approval is a requirement.
Question 13 |
When trades in OTC Equity are effected, where a reclamation is required due to improper delivery by the selling member, your firm as the buyer is:
Not required to make payment until discrepancies are resolved | |
Required to make payment pending settlement of discrepancies | |
May make payment for the part of the delivery which is not in dispute | |
Is required to make payment for the part of the delivery which is not in dispute |
Question 13 Explanation:
When your firm has determined that part of a purchase has been properly delivered, making payment for that part is permissible, though not a requirement. A reclamation can be done on the entire order if the purchasing B/D so determines.
Question 14 |
When a transfer of account has been requested by a customer of your member firm, each of the following is a legitimate reason for delaying or denying the transfer, except:
There is a court order claiming the customer owes money to their spouse | |
There is a bona fide claim by your firm against the account | |
Debit balances have yet to be paid | |
The RR who handled that client’s account owes the firm monies |
Question 14 Explanation:
Whether the RR handling a customer’s account may owe their member firm money has nothing to do with the processing of that customer’s transfer of account request.
Question 15 |
The proper order in the handing and processing of customer orders insofar as the back office is concerned is:
Order room; P&S department; margin department; cashier | |
Order room; margin department; P&S department; cashier | |
Wire room; P&S department; compliance department; the cage | |
Sales department; margin department; the cage |
Question 15 Explanation:
Under normal market conditions, once the RR writes the order ticket, the procedure is that the order room will execute the order; the purchase & sale department will handle the processing of the order with the contra-dealer through ACT or otherwise; the margin department will be involved to ensure any outstanding debit balance is taken into account where appropriate; and the cashier/cage will handle the receipt or disbursement of payment for the trade.
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