Series 6 Discrepancies, Complaints, and Arbitration practice questions
2 of the 50 scored Series 6 questions come from Discrepancies, Complaints, and Arbitration (~4% of the exam). Free CertFuel-authored sample questions, common mistakes, and the glossary terms you need to know.
Discrepancies, Complaints, and Arbitration is part of Function 4: Processes Transactions, one of the four FINRA Series 6 functional areas. This topic carries roughly 4% of the exam (2 of the 50 scored questions). The full function weight is 10% (5 scored questions).
Series 6 questions on customer complaints, written complaint procedures, FINRA arbitration (Code 12000), mediation, and the 6-year eligibility rule.
These are the exam traps that pull the highest miss rates from Series 6 candidates on Discrepancies, Complaints, and Arbitration questions:
- Treating an oral complaint the same as a written one (written complaints trigger specific reporting and retention duties)
- Forgetting that FINRA arbitration eligibility runs 6 years from the event giving rise to the dispute
- Confusing mediation (non-binding) with arbitration (binding) in the FINRA dispute-resolution forum
8 hand-checked Series 6 sample questions on Discrepancies, Complaints, and Arbitration, sampled from the CertFuel practice bank. Click any answer choice to reveal the explanation and the "why it matters" note. Every question is multiple choice (A/B/C/D, one correct answer) and matches the format of the real FINRA exam.
A customer sends a text message to her registered representative stating: 'You sold me the wrong share class and I want my money back.' Under the complaint recordkeeping requirements, this text is:
Correct answer: B. Correct. A text message is a written communication. A written grievance by a customer involving the activities of the member or associated person is a complaint and must be forwarded to the principal and entered in the OSJ file.
Why not the others?
- A (not a complaint, because text messages are informal and not written communications): Text messages are written communications. The rule treats letters, emails, text messages, faxes, and social-media direct messages identically for this purpose.
- C (a complaint only if the customer follows up with a signed, mailed letter within 30 days): A written complaint is not contingent on a follow-up letter. The text message itself is the reportable written grievance.
- D (a complaint only if the customer specifically uses the word 'complaint'): No magic words are required. A grievance about the member's or rep's activities, in writing, is sufficient.
Text message as written complaint. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
A written customer complaint alleging a sales-practice violation must be disclosed on Form U4 when the claimed damages are:
Correct answer: B. Correct. Written customer complaints alleging sales-practice violations with claimed damages of $5,000 or more must be disclosed on Form U4, regardless of merit and regardless of whether the customer later withdraws the complaint.
Why not the others?
- A ($1,000 or more, to capture even minor sales-practice disputes): One thousand dollars is not the disclosure threshold. The Form U4 customer-complaint disclosure threshold is $5,000 in claimed damages.
- C ($15,000 or more, matching the event-report threshold for associated-person settlements): Fifteen thousand dollars is the associated-person settlement-reporting threshold, not the Form U4 customer-complaint disclosure threshold. Complaints cross the Form U4 line at $5,000 claimed, while settlements and awards cross the event-report line at $15,000 or $25,000 actually paid.
- D ($25,000 or more, matching the firm-level event-report threshold): Twenty-five thousand dollars is the firm-level event-report threshold for settlements, not the Form U4 customer-complaint disclosure threshold.
$5,000 Form U4 threshold. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
Which of the following conduct patterns is most likely to produce an internal-conclusion finding and potential FINRA disciplinary enforcement against a Series 6 representative?
Correct answer: D. Correct. Unsuitable variable-annuity exchanges that materially disadvantage the customer for new-commission generation are one of the recognized conduct patterns that produce internal-conclusion findings, information requests, and eventual FINRA disciplinary sanctions for Series 6 reps.
Why not the others?
- A (Providing an accurate mutual-fund prospectus to a customer before accepting the order): Providing an accurate prospectus is a compliance action, not misconduct.
- B (Declining to recommend a variable annuity when the customer does not need tax deferral): Declining an unsuitable recommendation is exactly what compliance expects, not a violation.
- C (Forwarding a written customer complaint promptly to the principal for investigation): Forwarding complaints to the principal is the required escalation path, not a violation.
Series 6 conduct patterns. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
A FINRA investigation of a Series 6 rep most commonly begins with:
Correct answer: B. Correct. The typical enforcement chain begins with a written customer complaint, firm internal-investigation finding, or FINRA surveillance alert, then proceeds through information requests, sanctions, and potentially statutory disqualification.
Why not the others?
- A (A random-selection audit unrelated to any customer complaint): Random-selection audits occur, but the more common origin for Series 6 enforcement chains is a written customer complaint or surveillance alert.
- C (A referral from the Internal Revenue Service after a routine tax audit): IRS audits are not the typical origination point for FINRA investigations.
- D (A civil lawsuit filed by an unrelated third party in state court): Civil lawsuits by unrelated parties are not the typical origin for FINRA enforcement. The usual path is from customer complaints, internal findings, or FINRA surveillance.
Origination points for FINRA enforcement. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
A registered principal of a member firm suggests that late customer orders received after 4:00 PM ET be booked at today's NAV rather than at the next-day NAV, as an accommodation for favored customers. This proposal describes:
Correct answer: C. Correct. Booking orders received after market close at the prior NAV is late trading. It was the core misconduct driving the 2003 mutual-fund scandals and remains an ongoing enforcement priority.
Why not the others?
- A (a permissible as-of pricing adjustment for firm-caused errors): As-of pricing for firm-caused errors applies only when an actual error occurred. Routine late orders are not errors, and backdating them to a stale NAV is prohibited.
- B (an acceptable accommodation provided principal approval is documented): No level of internal approval can legitimize booking late orders at stale NAVs. The conduct is a sales-practice abuse regardless of documentation.
- D (a permissible market-timing arrangement disclosed in the prospectus): Market timing and late trading are separate concepts. Neither permits favored customers to receive yesterday's NAV on today's order.
Late trading vs. legitimate as-of pricing. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
A customer submits a written complaint alleging an unsuitable variable-annuity recommendation and claiming $12,000 in damages. The firm later settles for $18,000. Which combination of filings is typically triggered?
Correct answer: C. Correct. The OSJ complaint file retains the written complaint for 4 years. Form U4 amendment captures the $12,000 claim (over $5,000). The 30-day event report captures the $18,000 settlement (over $15,000 for the associated person). The quarterly statistical summary captures the complaint.
Why not the others?
- A (No Form U4 amendment, because the complaint is below the firm-level event-report threshold): Form U4 disclosure is triggered at $5,000 in claimed damages for a written sales-practice complaint, independent of the firm-level event-report threshold.
- B (Only a quarterly statistical complaint summary, because no other filings apply): This combination misses both the Form U4 amendment and the 30-day event report for the settlement.
- D (Only a BrokerCheck update, because BrokerCheck supersedes the underlying filings): BrokerCheck is a public-facing window into Form U4 filings, not a substitute for the underlying filings.
Multi-rail filings for one complaint. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
An associated person receives a FINRA information request and fails to respond by the deadline specified in the letter, providing no substantive answer and no communication with staff. The most likely outcome is:
Correct answer: A. Correct. A non-responsive or ignored information request typically results in a bar via default decision, regardless of whether the underlying allegation is ever proven. More than one-third of FINRA's bar enforcement cases involve non-cooperation rather than the underlying misconduct that prompted the inquiry.
Why not the others?
- B (A private reprimand filed with the firm's compliance department only, with no public consequence): A private reprimand is not the consequence. Non-cooperation is a public sanctionable violation.
- C (Automatic dismissal of the underlying investigation, because procedural deadlines protect both sides): Procedural deadlines in FINRA investigations do not work to the rep's benefit in the same way as in court. Missing a deadline is a violation, not a dismissal trigger.
- D (A civil lawsuit in state court for breach of contract, not a FINRA sanction): FINRA responds with regulatory sanctions, not civil breach-of-contract claims.
Default bar for non-response. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
During a FINRA-administered mediation, the parties reach a tentative agreement but one side has not yet signed a written settlement document. That party now wants to discontinue the mediation. The party:
Correct answer: A. Correct. Any party may withdraw at any time before signing a written settlement agreement, by giving written notice to the mediator, the other parties, and the Director of Mediation.
Why not the others?
- B (Must continue, because the tentative agreement is binding once discussed): A tentative agreement is not binding until reduced to writing and signed. The party retains the right to walk away.
- C (May withdraw only if the mediator concludes the matter cannot be resolved): The mediator's conclusion is not a prerequisite. A party may unilaterally withdraw before signing a written settlement.
- D (May withdraw only by paying the opposing party's mediation fees): Withdrawal is not conditioned on paying the opposing party's fees. Mediation is voluntary and withdrawal is a right.
Mediation withdrawal right. This pattern shows up repeatedly on the Series 6, and recognizing it cold is what separates first-try passes from retests.
The 4 glossary terms most likely to appear on Series 6 Discrepancies, Complaints, and Arbitration questions. Click any term for the full definition, example, and testing pattern.
Financial Industry Regulatory Authority (FINRA)
A self-regulatory organization (SRO) that regulates broker-dealers and their registered representatives through examination, enforcement, an...
North American Securities Administrators Association (NASAA)
The association of state securities regulators that develops model rules like the Uniform Securities Act and administers qualification exams...
Churning
Excessive trading in a client's account to generate commissions without regard to the client's investment objectives. Requires three element...
Front-Running
The prohibited practice of trading in a security ahead of a client's order to profit from the anticipated price movement caused by the clien...
Other topics in Function 4: Processes Transactions (10% of the exam, 5 scored questions). Practice each one to round out the function:
Looking for everything? Head to the Series 6 practice questions hub for all 13 topics, or take the 55-question full practice test.