General Securities Sales Supervisor (Series10) Practice Exam

Which records must a member firm maintain for stated time periods under FINRA rules?

1. A Records of gratuities paid by the member firm

2. B Records of each customer order

3. C Records of communications with the public

4. D All of the above

The correct answer is: D All of the above

Member firms are required by FINRA rules to maintain certain records for specified time periods to ensure compliance, transparency, and accountability in their operations. The requirement to keep detailed records serves multiple purposes, including regulatory oversight, protection of investors, and maintaining the integrity of the securities market. Records of gratuities paid by the member firm are important as they help to prevent and identify potential conflicts of interest or influence that could arise from gifts and entertainment in the financial services sector. Keeping accurate records ensures firms can demonstrate compliance with ethical standards. Records of each customer order are crucial for tracking and validating trading activity, ensuring that all transactions can be accurately accounted for, and providing evidence that the firm is executing orders as instructed by clients. This requirement also plays a role in maintaining market integrity and protecting investor interests. Records of communications with the public include various forms of marketing materials, correspondence, and disclosures. These records are vital for ensuring that the information provided to potential and existing clients is accurate, complete, and not misleading. Compliance with rules regarding communication also supports transparency within the financial markets. Maintaining all of these records for the required time periods is essential for member firms to fulfill their regulatory obligations under FINRA. By adhering to these rules, firms can safeguard their operations against misconduct