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SIE practice questionhardSupervisory Procedures

Under FINRA Rule 3110, which of the following is TRUE regarding the review of a registered representative's correspondence and communications?

  1. AOnly written letters must be reviewed; electronic communications are exempt
  2. BCorrespondence review is only required for representatives who have received customer complaints
  3. CThe firm must establish procedures to review correspondence and may use risk-based sampling rather than reviewing every communication✓ Correct answer
  4. DThe firm must review all electronic correspondence before it is sent to customers
Explanation

Why C — The firm must establish procedures to review correspondence and may use risk-based sampling rather than reviewing every communication

FINRA Rule 3110 requires firms to have procedures for reviewing correspondence and communications with the public. However, firms are permitted to use a risk-based approach, meaning they can review a sample of correspondence rather than every single communication. The review requirements apply to all forms of communication — written, electronic, and digital. Factors for risk-based review include the representative's disciplinary history, customer complaints, and the nature of the communications.

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