Series 7 practice questionmediumReferral Programs — Written Agreements
A broker-dealer wants to compensate a third-party firm for client referrals. What documentation is required to comply with FINRA rules?
- ANo documentation is necessary if the compensation is nominal.
- BA written agreement must be established detailing the terms and compensation.✓ Correct answer
- COnly a verbal notification to compliance is needed.
- DAn oral agreement is sufficient if witnessed by both parties.
Explanation
Why B — A written agreement must be established detailing the terms and compensation.
FINRA mandates a written agreement for referral arrangements to ensure all terms and compensation are clearly documented and reviewed for compliance.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Seeks Business for the Broker-Dealer questions
- A broker-dealer operating through a networking arrangement in a bank wants to use joint marketing materials. Which…
- In a networking arrangement between a bank and a broker-dealer, which statement about dual employees is accurate?
- A registered rep wants to launch a personal referral program to attract new clients to the firm. What must the rep do…
- A registered person refers a client to another department within the same broker-dealer and is to receive a referral…