Series 7 practice questionmediumReferral Program — Pre-Approval Requirements
A registered rep wants to launch a personal referral program to attract new clients to the firm. What must the rep do before implementing the program?
- ANotify the clients only.
- BObtain written pre-approval from the broker-dealer's compliance department.✓ Correct answer
- CBegin the program and notify compliance later.
- DOffer referral fees to anyone who brings in new clients.
Explanation
Why B — Obtain written pre-approval from the broker-dealer's compliance department.
FINRA requires that any referral program be reviewed and approved in advance by the firm's compliance department to ensure regulatory compliance.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Seeks Business for the Broker-Dealer questions
- A registered representative is considering entering into a networking arrangement with a local credit union to refer…
- A broker-dealer operating through a networking arrangement in a bank wants to use joint marketing materials. Which…
- A broker-dealer has a networking arrangement with a bank. Which of the following must be clearly disclosed to customers…
- A broker-dealer wants to compensate a third-party firm for client referrals. What documentation is required to comply…
- A registered representative at a broker-dealer wants to compensate an unregistered bank employee for referring clients.…
- In a networking arrangement between a bank and a broker-dealer, which statement about dual employees is accurate?
- A broker-dealer offers a referral program to an affiliated bank branch where each unregistered employee can receive a…
- A registered person refers a client to another department within the same broker-dealer and is to receive a referral…