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← Series 79: Section 4
Series 79 practice questionhardSupervision Requirements

A FINRA-member firm discovers that a supervisor failed to escalate a compliance red flag related to insider trading. What is the potential regulatory consequence for the supervisor under FINRA rules?

  1. AA written warning only
  2. BMandatory reassignment to a non-supervisory position
  3. CFines and possible suspension or bar from acting in a supervisory capacity✓ Correct answer
  4. DImmediate criminal prosecution by the SEC
Explanation

Why C — Fines and possible suspension or bar from acting in a supervisory capacity

FINRA can fine and suspend or bar supervisors who fail to fulfill their supervisory responsibilities, including escalation of compliance red flags. Immediate criminal prosecution is rare in these cases, while warnings or reassignment are not the primary regulatory remedies.

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