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.
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