Free Series 24 Practice Exam

1. Question 1

   A broker-dealer must file a Currency Transaction Report (CTR) for currency transactions by, or on behalf of, a customer exceeding:

   • A.$3,000
   • B.$5,000
   • C.$10,000
   • D.$25,000
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   Correct answer: C. $10,000

   Under the Bank Secrecy Act, broker-dealers must file a CTR (FinCEN Form 112) for currency transactions exceeding $10,000 in a single business day, whether in a single transaction or in multiple transactions the firm knows to be by or on behalf of the same person.

   • AA. Incorrect. $3,000 is the threshold for the funds transfer recordkeeping and travel rules, which require a financial institution to keep records and pass along information on transmittals at or above that amount. It does not trigger a currency transaction report.
   • BB. Incorrect. $5,000 is the minimum amount at which a broker-dealer must file a Suspicious Activity Report (SAR) on a transaction that involves or aggregates at least that much in funds or assets and appears suspicious. A SAR depends on suspicious activity, not on a cash amount, so it is a different filing from a CTR.
   • CC. Correct. Under the Bank Secrecy Act, a broker-dealer must file a CTR for currency transactions by, or on behalf of, a customer that exceed $10,000. Multiple cash transactions in one business day are aggregated when they total more than that amount.
   • DD. Incorrect. $25,000 is not the CTR threshold or a currency reporting threshold under the Bank Secrecy Act. Using it would leave cash transactions between $10,000 and $25,000 unreported.

   • Source: 31 CFR 1010.311 (currency transaction reports)
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2. Question 2

   A firm keeps a type of record for which neither the Exchange Act rules nor any FINRA rule specifies a retention period. How long does FINRA Rule 4511 require the firm to preserve it?

   • A.Three years from the date of the record
   • B.Four years from the date of the record
   • C.Six years from the date of the record
   • D.For as long as the firm remains a member
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   Correct answer: C. Six years from the date of the record

   FINRA Rule 4511(b) provides that, for books and records required under FINRA rules for which no retention period is specified under FINRA rules or Exchange Act Rule 17a-4, the firm must preserve them for at least six years. This default prevents gaps in retention.

   • AA. Three years is the retention period for certain specific Rule 17a-4 records, not the FINRA default.
   • BB. Four years applies to the customer complaint file under Rule 4513, not the default.
   • CC. Correct: the FINRA default retention period is six years.
   • DD. Retention for the life of the firm applies to specific organizational records, not the default.

   • Source: FINRA Rule 4511 (General Requirements)
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3. Question 3

   A client emails a representative accusing the firm of unauthorized trades and asking for reimbursement. The representative deletes the message rather than forwarding it. Which principal response is most appropriate?

   • A.Treat the complaint as an informal comment because it came by email rather than as a signed letter, and log it only if the client follows up.
   • B.Wait until the client files a court action or arbitration claim, then begin an investigation and evaluate any reporting obligations.
   • C.Preserve the complaint, investigate promptly, and evaluate regulatory reporting, supervision and remediation requirements for the unauthorized-trade claim.
   • D.Delete associated order tickets and related emails once the matter is closed, so the allegation cannot be misunderstood in a later review.
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   Correct answer: C. Preserve the complaint, investigate promptly, and evaluate regulatory reporting, supervision and remediation requirements for the unauthorized-trade claim.

   A written grievance alleging unauthorized trades is a complaint that must be preserved, investigated and evaluated for reporting. Deleting the email or related records compounds the violation.

   • AA. A written grievance by email is still a written complaint and must be recorded and handled.
   • BB. Obligations arise when the complaint is received, not when litigation or arbitration begins.
   • CC. The principal should preserve the record, investigate and assess reporting and remediation.
   • DD. Destroying order tickets or emails violates recordkeeping requirements.

   • Source: FINRA Rule 4513 (Records of Written Customer Complaints)
   • Source: FINRA Rule 4530 (Reporting Requirements)
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