FINRA Series 99 Certification Exam Syllabus

• Types of retail, institutional and prime brokerage customer accounts
• Types of customer account registrations (e.g., individual, corporate)
• Types of individual and employer-sponsored retirement accounts
  - Contribution limits and required minimum distributions (RMDs)
  - Transfer versus rollover
• Account opening
  - Entities authorized to open and transact business in the account
  - New account paperwork and appropriate approvals
  - Standing settlement instructions (SSIs)
  - Required customer information and documentation
  1. Customer identification program (CIP) requirements
  2. Know your customer (KYC)
• Maintenance of accounts
  - Securities products and product specific disclosures (e.g., illiquid securities)
  - Escheatment process
  - Updating customer account records
  - Restricting account activity or freezing accounts
  - Accounts for associated persons of member firms
  - Account specific disclosures (e.g., options disclosure document (ODD), mutual fund prospectus)

- FINRA Rule

• 2090 – Know Your Customer

• Movement of funds and securities
  - Methods of fund transfer (e.g., wires, Automated Clearing Houses (ACHs), journals)
  - Methods of giving instructions (e.g., letter of authorization (LOA))
  - Transfer processes for various account types
  - Medallion signature guarantee program
  - Currency Transaction Reports (CTRs)
  - Reinvestments and sweeps
• Transfers or partial transfers of accounts between broker-dealers
  - Automated Customer Account Transfer Service (ACATS) versus non-ACATS transfers
  - Residual and residual credit processing
• Handling checks
  - Characteristics of negotiable checks
  - Check issuance
  - Maintenance of a check blotter
• Prohibited activities related to cashiering and account transfers
  - Check kiting or altering checks
  - Holding checks for extended periods
  - Not processing (or holding) account transfers for an extended period

- FINRA Rules

• 2140 – Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes
• 11870 – Customer Account Transfer Contracts

• Custody and control of securities
  - Safekeeping versus segregation
  - Custody and control
  - Street name
  - Directly held mutual fund shares
  - Securing customer assets
  - Periodic physical count of securities (“box count”)
  - Maintenance of a stock record and verifying securities
• Securities transfers
  - Registered versus bearer certificates
  - Good delivery, transfer agent and stock/bond power
  - Validation of a certificate
  - Maintenance of a securities blotter
  - Handling lost certificates
  - Direct Registration System (DRS) and Deposit/Withdrawal at Custodian (DWAC)
  - Types of securities that are depository eligible
• Stock legends
  - Impact of a legend on the negotiability of a certificate
  - Control and restricted securities
• Holding periods for the removal of legends (reporting versus non-reporting companies)

- FINRA Rules

• 4330 – Customer Protection – Permissible Use of Customers’ Securities
• 4522 – Periodic Security Counts, Verifications and Comparisons
• 11300 Series – Delivery of Securities
• 11500 Series – Delivery of Securities with Restrictions

- SEC Rules and Regulations

• Securities Act of 1933
  - 144 – Persons Deemed Not to be Engaged in a Distribution and Therefore Not Underwriters
• Securities Exchange Act of 1934
  - 15c3-3 – Customer Protection – Reserves and Custody of Securities
  - 17f-1(c)(2) – Requirements For Reporting and Inquiry With Respect to Missing, Lost, Counterfeit or Stolen Securities — Reporting Requirements

• Trade reporting systems
• Best execution, trading capacity and quotation
• Trader corrections “as/of” and past settlement date
• Error accounts
• Prohibited activities related to trading, including front running, churning or excessive trading, market manipulation, excessive markups, prohibited breakpoint sales, and improper sharing in profits and losses with customers

- FINRA Rules

• 2010 – Standards of Commercial Honor and Principles of Trade
• 2111 – Suitability
• 2342 – “Breakpoint” Sales
• 5210 – Publication of Transactions and Quotations
• 5220 – Offers at Stated Prices
• 5230 – Payments Involving Publications that Influence the Market Price of a Security
• 5250 – Payments for Market Making
• 5270 – Front Running of Block Transactions
• 5290 – Order Entry and Execution Practices
• 5310 – Best Execution and Interpositioning
• 5320 – Prohibition Against Trading Ahead of Customer Orders
• 6438 – Displaying Priced Quotations in Multiple Quotation Mediums

- SEC Rules and Regulations

• Securities Act of 1934
• Rule 15l-1 – Regulation Best Interest
• Rule 17a-14 – Form CRS, for preparation, filing and delivery of Form CRS

• Different margin requirements for different securities
• Types of accounts that are permitted to trade on margin
• Documentation and disclosure requirements
• Federal and FINRA margin requirements, margin calls
• Stock lending
• Short sale requirements, including locating and borrowing securities
• Day trading and buying power

- FINRA Rule

• 4200 Series – Margin

• Comparison of trades
• Settlement service providers and methods of settlement (e.g., clearing broker-dealer versus clearing facility, institutional clearing and settlement arrangements)
• Repurchase agreement (repo)/resale trades and settlements
• Continuous net settlement (CNS)
• Don’t know (DK) trade
• Requirements to buy-in or closeout a fail
• Confirmation of aged securities fails
• Delivery verses payment (DVP) settlement

- FINRA Rules

• 11200 Series – Comparisons or Confirmations and “Don’t Know Notices”
• 11600 Series – Delivery of Bonds and Other Evidences of Indebtedness
• 11700 Series – Reclamations and Rejections
• 11800 Series – Close-out Procedures

- SEC Rules and Regulation

• Securities Exchange Act of 1934
  - 15c3-3 – Customer Protection — Reserves and Custody of Securities
• Regulation SHO
  - 204 – Close-out Requirement

• Customer account statements
  - Types of information that appear on an account statement
  - Customer statement versus performance report
• Confirmations
  - Types of information that appear on a confirmation
  - Confirmation delivery requirements, including electronic confirmations
  - Non-trade confirmations/third-party activity notices
  - Prospectus delivery requirements
• Tax reporting
  - Purpose of tax forms
  - Cost basis
  - Types of optional and required tax withholding
• Prohibited activities related to pricing securities on account statements and confirmations
  - Falsifying or withholding documents

• Financial and operations principal (FINOP) responsibilities
• FOCUS report
• General ledger
• Net capital and the reserve formula calculation

- FINRA Rule

• 4311 – Carrying Agreements

- SEC Rules and Regulations

• Securities Exchange Act of 1934
  - Rule 15c3-1 – Net Capital Requirements for Brokers or Dealers

• Reconciliations
• Timeline of posting entries
• Retention requirements for firm documents, including requirements for electronic storage
• Prohibited activities related to maintenance of books and records (e.g., falsifying records and improper maintenance/retention of records)

- FINRA Rules

• 4510 Series – Books and Records Requirements
• 4520 Series – Financial Records and Reporting Requirements

- SEC Rules and Regulations

• Securities Exchange Act of 1934
  - 17a-3 – Records to be Made by Certain Exchange Members, Brokers and Dealers
  - 17a-4 – Records to be Preserved by Certain Exchange Members, Brokers and Dealers

• Methods of communication
• Nonpublic personal information
• Commission management/soft dollars
• Prohibition against paying commissions to unregistered persons
• Due diligence for vendor selection

- FINRA Rules

• 2210 – Communications with the Public

• Confidentiality of customer information
• Exchange and control of information between departments and outside the firm
• Disclosures to customers
• Objecting beneficial owner (OBO) versus non-objecting beneficial owner (NOBO)
• Privacy rules
• Red Flags Rule

- FINRA Rule

• 2060 – Use of Information Obtained in Fiduciary Capacity

- SEC Rules and Regulations

• Regulation S-P – Privacy of Consumer Financial Information and Safeguarding Personal Information
• Regulation S-ID – Identity Theft Red Flags

• Recognizing a complaint and/or potential red flag
• Methods of escalation

- FINRA Rules

• 4513 – Records of Written Customer Complaints
• 4530 – Reporting Requirements

- USA PATRIOT Act

• Section 326 – Verification of Identification

• Key controls and the separation/segregation of duties
  - Segregation of functions and supervision among departments of the broker-dealer
  - Information barriers
  - Controlling access to buildings, office spaces, files and systems
  1. Entitlement policies
  2. Restrictions on access to information
• Written supervisory procedures (WSPs)
  - Compliance with WSPs
  - Updating
  - Annual compliance meeting
• Business continuity plan (BCP)
  - Disclosure to customers

- FINRA Rules

• 3110 – Supervision
• 3120 – Supervisory Control System
• 3130 – Annual Certification of Compliance and Supervisory Processes
• 4370 – Business Continuity Plans and Emergency Contact Information