Series 6 Customer Communications and Records practice questions

Correct answer: C. Correct. An investment objective update is a material event. It forces the rep to reassess existing positions and any ongoing recommendations under the new profile.

Why not the others?
- A (a clerical change that requires no further analysis): An objective update is not clerical. It is a material event.
- B (an administrative event that requires no confirmation to the customer): The customer must receive written confirmation of the update within 30 days.
- D (a trigger for immediate account closure): An objective change is not a closure trigger. It is a record-update and re-suitability event.

Correct answer: A. Correct. The BSA cross-reference provision extends broker-dealer recordkeeping to Bank Secrecy Act obligations administered by FinCEN, including Currency Transaction Reports on cash over $10,000 and Suspicious Activity Reports.

Why not the others?
- B (the SEC's Division of Corporation Finance only): Corporation Finance addresses issuer filings (registration statements, periodic reports), not broker-dealer BSA recordkeeping.
- C (the CFTC under the Commodity Exchange Act): The CFTC governs commodity futures, not securities broker-dealer BSA recordkeeping.
- D (MSRB for all customer transactions): MSRB recordkeeping rules govern municipal securities, not BSA obligations.

Correct answer: B. Correct. The well-established anti-fraud practice is to confirm the change to both the old address and the new address. This prevents an imposter from redirecting statements and confirmations without the customer's knowledge.

Why not the others?
- A (send written confirmation of the change to the new address only): Confirming only to the new address allows an imposter who redirected the address to intercept the notification.
- C (send verbal confirmation by phone to the customer without any written notice): Verbal confirmation alone is inadequate. Written confirmation is the standard, sent to both addresses.
- D (postpone all mailings for 60 days to verify the change indirectly): Postponing mailings without confirming the change creates a gap in customer communication, not a safeguard.

Correct answer: C. Correct. The TCP addition is updated on the account record and the customer receives written confirmation, consistent with the general account-information notification framework.

Why not the others?
- A (require the TCP to sign an agreement granting the TCP trading authority): A TCP has no trading authority. The TCP is a contact resource the firm may reach out to in specific circumstances.
- B (update the record without sending any notification to the customer): The customer receives written confirmation of TCP additions and changes.
- D (require the TCP to submit personal financial statements before the designation is accepted): No financial disclosure is required of the TCP. The TCP is a contact resource, not an account party.

Correct answer: D. Correct. The rule attaches to accounts with a position, balance, or activity during the period. A truly dormant zero-balance, no-activity account falls outside the quarterly obligation until activity returns.

Why not the others?
- A (monthly delivery, because the account remains open): Open but inactive accounts with no balance, no position, and no activity do not generate an affirmative monthly delivery obligation.
- B (one statement delivered within three business days of quarter-end): No statement is required when there is no position, no balance, and no activity during the period.
- C (one statement delivered within 30 calendar days of quarter-end): The rule does not impose a 30-day post-quarter delivery standard on a truly dormant zero-balance, no-activity account.

Correct answer: D. Correct. The customer must receive the updated information in writing within 30 days of the update. The written delivery to the customer satisfies the notification requirement.

Why not the others?
- A (a verbal confirmation during the next quarterly call): Verbal confirmation does not satisfy the notification requirement. A written confirmation is required.
- B (an entry on the internal account record accessible to the rep only): An internal record entry accessible only to the rep does not reach the customer. The customer must receive the confirmation.
- C (a notation in the firm's supervisory review log only): Supervisory review logs are internal. The customer must be notified directly in writing.

Correct answer: C. Correct. The firm's failure to furnish the updated account information within 30 days is its own violation of the notification requirement, regardless of whether the underlying record is otherwise correct.

Why not the others?
- A (no violation, because the record is internally correct): Failure to send the confirmation to the customer is a standalone violation, even if the record itself is correct.
- B (a violation only if the customer later complains about the failure to confirm): The obligation is not triggered by complaint; it is an affirmative delivery obligation that must be met within 30 days.
- D (a violation only if the firm later updates the objective a second time): A second update is not the trigger. The missed 30-day notification on the first update is the violation.

Correct answer: A. Correct. A net transaction hides the markup inside the price; to be compliant, the confirmation must be explicitly labeled 'net' so the customer understands there is no separate commission line.

Why not the others?
- B (label the transaction as an agency trade to cover the embedded compensation): Mislabeling a net transaction as an agency trade misrepresents the execution and violates the confirmation rule.
- C (omit the capacity disclosure because the price is all-inclusive): Capacity disclosure is always required. Omitting it is a direct violation.
- D (show only the trade date and leave capacity to the customer's account statement): Capacity belongs on the confirmation itself, not the periodic statement. Omitting capacity and net-transaction labeling is a violation.