Series 7 practice questionmediumReferral Programs — Payment Timing
A registered person refers a client to another department within the same broker-dealer and is to receive a referral fee. When may the fee be paid under FINRA rules?
- AImmediately upon the referral, regardless of outcome.
- BOnly after the client opens an account and conducts a securities transaction.✓ Correct answer
- CAfter the client expresses interest in products.
- DOnly at year-end, regardless of activity.
Explanation
Why B — Only after the client opens an account and conducts a securities transaction.
Referral compensation can only be paid if it results in a business transaction, such as opening an account and executing a transaction.
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