Series 24 Domain 3: Supervision of Retail and Institutional Customer-Related Activities Welcome to your Series 24 Domain 3: Supervision of Retail and Institutional Customer-Related Activities 1. Series 24: Supervision of Retail and Institutional Customer-Related Activities What must a supervisor do when they detect that a discretionary account has transactions not suitable for the client's investment profile? Report to FINRA immediately Review the client's investment profile and discuss the matter with the account manager Request the client to revise the investment profile Ignore as discretionary accounts allow for any trades None 2. Series 24: Supervision of Retail and Institutional Customer-Related Activities When overseeing the trading activities in a retail brokerage, which action should a supervisor take to comply with best execution requirements? Routinely review trading algorithms Only allow trades during market hours Limit trading to a specific list of approved brokers Increase trading limits for preferred clients None 3. Series 24: Supervision of Retail and Institutional Customer-Related Activities In supervising the communications of registered representatives with the public, what must a supervisor ensure regarding social media use? Posts are pre-approved by compliance Employees use personal accounts for business purposes Content shared is unrelated to finance All posts are deleted after 30 days None 4. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is a key consideration when supervising sales of complex financial products to retail clients? Ensuring that only high-net-worth individuals are targeted Confirming that clients understand the risks associated with the products Prioritizing sales over client suitability Limiting the amount of information provided to avoid client confusion None 5. Series 24: Supervision of Retail and Institutional Customer-Related Activities A supervisor notices that a registered representative recommends only products from one issuer despite better available alternatives. What should the supervisor do first? Ignore as long as the products are not inferior Investigate the reasons behind the biased recommendations Encourage the representative to continue with current practices Increase the variety of products offered by other issuers None 6. Series 24: Supervision of Retail and Institutional Customer-Related Activities How should a supervisor react to reports of potentially manipulative trading practices within their supervised area? Monitor the situation to confirm before taking any action Immediately suspend the trading activities in question Conduct an internal investigation to verify the practices Report the activity to regulatory authorities without verification None 7. Series 24: Supervision of Retail and Institutional Customer-Related Activities In supervising the use of margin accounts, what is essential for the supervisor to monitor? The interest rate charged on borrowed funds Frequent changes in the margin requirements Client usage and potential for margin calls The tax implications of trading on margin None 8. Series 24: Supervision of Retail and Institutional Customer-Related Activities If an internal audit identifies a pattern of non-compliance with trade documentation in a department, what should the supervisor's immediate action be? Reprimand the employees involved Review and enhance training programs Ignore the findings if profits are high Change the audit company None 9. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is a supervisor's role in handling conflicts of interest in client transactions? Encourage employees to manage these independently Ensure conflicts are disclosed and managed according to regulatory standards Cover up conflicts to maintain client trust Focus solely on profitability regardless of conflicts None 10. Series 24: Supervision of Retail and Institutional Customer-Related Activities What must a supervisor consider when approving advertisements for new investment products? The attractiveness of the advertisement Compliance with regulatory standards for truthfulness and clarity The number of competitors' advertisements The potential revenue from the advertised product None 11. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is the supervisor's responsibility regarding the oversight of electronic communications concerning client transactions? Ensure all communications are deleted after transaction completion Monitor and ensure compliance with data protection laws Only review communications that lead to complaints Allow unrestricted access to electronic communications by all employees None 12. Series 24: Supervision of Retail and Institutional Customer-Related Activities In situations where a registered representative is involved in outside business activities, what is the supervisor's best course of action? Encourage the representative to prioritize these activities Ensure that such activities are fully disclosed and do not conflict with firm interests Suspend the representative to prevent potential conflicts Allow the activities without any disclosure to avoid bureaucracy None 13. Series 24: Supervision of Retail and Institutional Customer-Related Activities When supervising the handling of sensitive client data, what is the priority for a supervisor? Ensure data is accessible to all staff for operational efficiency Store all data on external drives to prevent server issues Ensure adherence to strict data security protocols Share data freely within the firm to facilitate client management None 14. Series 24: Supervision of Retail and Institutional Customer-Related Activities How should a supervisor handle the introduction of a new technology platform for trading? By prioritizing speed over security By ensuring all relevant staff are trained and understand the platform By limiting access to senior traders only By using the platform without formal testing None 15. Series 24: Supervision of Retail and Institutional Customer-Related Activities What approach should a supervisor take when a pattern of late reporting of trades by a representative is observed? Overlook the pattern if the representative is otherwise performing well Train the representative on the importance of timely reporting Immediately fire the representative Increase the representative's trading limits as a challenge None 16. Series 24: Supervision of Retail and Institutional Customer-Related Activities In the context of supervising retail and institutional customer-related activities, what is a supervisor's responsibility regarding the handling of customer complaints? Ignore complaints unless they escalate to regulatory authorities Record and investigate each complaint thoroughly, ensuring appropriate resolution Discourage clients from lodging complaints to avoid regulatory scrutiny Forward all complaints directly to the firm's legal department for resolution None 17. Series 24: Supervision of Retail and Institutional Customer-Related Activities When supervising the activities of registered representatives, what is essential for a supervisor to monitor to detect potential violations? The number of clients served by each representative The frequency of office meetings held by representatives The representatives' adherence to dress code policies The representatives' adherence to regulatory and firm policies and procedures None 18. Series 24: Supervision of Retail and Institutional Customer-Related Activities When supervising customer accounts, what should a supervisor do if they suspect unauthorized trading? Ignore the suspicion to avoid conflict with the representative Immediately report the suspicion to regulatory authorities Investigate the suspicion and take appropriate action, including informing senior management Confront the client directly without involving other parties None 19. Series 24: Supervision of Retail and Institutional Customer-Related Activities What should a supervisor ensure regarding the handling of client funds by registered representatives? Allow representatives full discretion over the use of client funds Regularly audit client funds to ensure compliance with regulations Segregate client funds from firm funds and monitor for misappropriation Use client funds for firm expenses to improve profitability None 20. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is a key consideration for a supervisor when overseeing the opening of new customer accounts? Streamlining the process by minimizing documentation requirements Verifying the identity of each customer and ensuring suitability of account types Encouraging representatives to open as many accounts as possible Allowing representatives to open accounts without client consent None 21. Series 24: Supervision of Retail and Institutional Customer-Related Activities How should a supervisor handle instances where a registered representative fails to disclose potential conflicts of interest? Ignore the oversight if the representative generates significant revenue Inform clients directly about the conflicts Investigate the oversight and take appropriate disciplinary action Provide additional compensation to the representative to mitigate conflicts None 22. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is a supervisor's primary responsibility regarding the supervision of trading activities within the firm? Maximizing profits through aggressive trading strategies Monitoring for compliance with regulatory requirements and internal policies Limiting trading activities to reduce market volatility Encouraging representatives to engage in speculative trading None 23. Series 24: Supervision of Retail and Institutional Customer-Related Activities When supervising the handling of client orders, what should a supervisor ensure regarding order execution? Prioritizing orders from high-net-worth clients over others Execution of orders at the best available prices in a timely manner Delaying order execution to take advantage of market fluctuations Executing orders only during specific market hours None 24. Series 24: Supervision of Retail and Institutional Customer-Related Activities In the context of supervising retail and institutional customer-related activities, what should a supervisor do when a representative engages in unauthorized trading? Ignore the behavior if it generates profits for the firm Notify the representative's direct manager but take no further action Investigate the unauthorized trading and take appropriate disciplinary action Encourage the representative to continue the unauthorized trading to meet targets None 25. Series 24: Supervision of Retail and Institutional Customer-Related Activities What is a supervisor's responsibility regarding the supervision of client communications by registered representatives? Allowing representatives full discretion over client communications Monitoring and approving client communications to ensure compliance with regulations Discouraging representatives from communicating with clients to avoid liability Ignoring client communications unless they lead to complaints None 26. Series 24: Supervision of Retail and Institutional Customer-Related Activities When supervising the marketing and promotional materials used by representatives, what is the primary concern of the supervisor? The aesthetic quality of the materials Ensuring all materials are approved for compliance with advertising regulations The cost-effectiveness of the marketing campaigns The speed at which materials are produced and distributed None 27. Series 24: Supervision of Retail and Institutional Customer-Related Activities How should a supervisor approach the review of electronic communications related to trading? Randomly select communications to review for compliance Only review communications flagged by clients Systematically review all communications to ensure adherence to policies Allow representatives to self-review their communications None 28. Series 24: Supervision of Retail and Institutional Customer-Related Activities What action should a supervisor take when they notice a pattern of misrepresentation in the sales practices of a registered representative? Increase the sales targets of the representative to offset the risk Conduct a detailed review and provide retraining or disciplinary action as necessary Transfer the representative to another department Offer incentives to the representative to alter their sales tactics None 29. Series 24: Supervision of Retail and Institutional Customer-Related Activities In the supervision of derivative products trading, what is a critical aspect for the supervisor to monitor? The physical delivery of the underlying assets The speculative nature of all trades Compliance with risk management and suitability policies Ensuring all trades are profitable None 30. Series 24: Supervision of Retail and Institutional Customer-Related Activities When a new regulation is introduced affecting client advisory services, what is the supervisor's first step? Wait for industry feedback before taking any action Inform all staff and ensure understanding and compliance Seek legal advice on avoiding compliance Reduce the scope of advisory services offered None 1 out of 30 Time is Up! Time's up
