Series 7 practice questionhardReferral Programs and Networking — Sharing Compensation with Non-Registered Persons
A registered representative at a broker-dealer wants to compensate an unregistered bank employee for referring clients. Which of the following compensation structures would be compliant with FINRA rules?
- AA percentage of the total assets transferred by the referred client
- BA quarterly bonus based on the total number of referrals that open accounts and trade securities
- CA share of the commissions generated from the referred client’s transactions
- DA one-time, fixed dollar amount per referral, regardless of whether the referral results in a securities transaction✓ Correct answer
Explanation
Why D — A one-time, fixed dollar amount per referral, regardless of whether the referral results in a securities transaction
FINRA permits non-registered persons to receive a nominal, fixed fee per referral, but prohibits transaction- or asset-based compensation unless the person is registered.
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