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Series 24 Books and Records Practice Questions

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FINRA Series 24 Content Outline
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6
Updated
Nov 3, 2026

  1. Question 1, easy

    Under SEC Rules 17a-3 and 17a-4, for how long must a broker-dealer retain a customer's account records after the account is closed?

    • A.3 years after closing
    • B.5 years after closing
    • C.6 years after closing
    • D.For the life of the firm, with no fixed end date
    Show answer and explanationHide answer

    Correct answer: C. 6 years after closing

    Under Rule 17a-4(c), the records a firm collects under Rule 17a-3(a)(17) to open and maintain a customer account must be kept for six years after the account is closed (or after the information is replaced, if earlier). That is longer than the three-year period that applies to items such as order tickets and customer correspondence, so the shorter periods and an open-ended period do not fit.

    • A. 3 years is shorter than the retention period SEC Rules 17a-3/17a-4 require for customer account records after account closure.
    • B. 5 years understates the required retention period for customer account records following account closure under Rules 17a-3/17a-4.
    • C. Correct. Under SEC Rules 17a-3 and 17a-4, a broker-dealer must retain a customer's account records for 6 years after the account is closed.
    • D. The retention obligation has a defined end point (6 years after closing). It isn't an indefinite, lifetime-of-the-firm requirement.

  2. Question 2, medium

    Under SEC Rule 17a-4(f) as amended (compliance date May 3, 2023), which of the following satisfies the requirement for preserving a broker-dealer's electronic records?

    • A.Either a recordkeeping system that keeps a complete time-stamped audit trail of modifications and deletions, or preserving the records exclusively in a non-rewriteable, non-erasable format
    • B.Only a non-rewriteable, non-erasable (WORM) format; an audit trail alone is never sufficient
    • C.A RAID disk array, because disk redundancy protects the records from loss
    • D.Daily backup tapes kept off site, whatever the format of the primary records
    Show answer and explanationHide answer

    Correct answer: A. Either a recordkeeping system that keeps a complete time-stamped audit trail of modifications and deletions, or preserving the records exclusively in a non-rewriteable, non-erasable format

    Rule 17a-4(f), as amended with a compliance date of May 3, 2023, requires an electronic recordkeeping system to preserve each record for its retention period either by maintaining a complete time-stamped audit trail (covering modifications and deletions, when they occurred and who made them) or by preserving the records exclusively in a non-rewriteable, non-erasable format. The audit-trail alternative is new relative to the earlier rule, which was understood to require WORM storage. Disk redundancy and offsite backups are availability measures and do not by themselves meet either alternative.

    • A. Correct. The amended rule allows either alternative: a complete time-stamped audit trail, or a non-rewriteable, non-erasable format.
    • B. This reflects the earlier understanding of the rule. The amended rule also permits a system that maintains a complete time-stamped audit trail.
    • C. RAID protects against disk failure, not against alteration or deletion, so it meets neither alternative by itself.
    • D. Offsite backups address availability, not the rule's requirement for an audit trail or a non-rewriteable, non-erasable format.

  3. Question 3, medium

    A broker-dealer hires a vendor to prepare and maintain some of its required records. What must the firm obtain from the vendor under SEC Rule 17a-4?

    • A.A written undertaking that the records remain the firm's property and will be promptly produced to regulators on request
    • B.Approval from the SEC for the vendor to hold the records
    • C.Confirmation that the vendor is registered as a broker-dealer with FINRA
    • D.An agreement transferring ownership of the records to the vendor after three years, with the firm keeping a copy available for regulators
    Show answer and explanationHide answer

    Correct answer: A. A written undertaking that the records remain the firm's property and will be promptly produced to regulators on request

    Rule 17a-4 allows a firm to use an outside entity to prepare or maintain records only if the entity undertakes in writing that the records are the firm's property and that it will promptly make them available to regulators. The firm remains responsible for compliance with the recordkeeping rules.

    • A. Correct: a written undertaking on ownership and regulator access is required.
    • B. The SEC does not pre-approve vendors for recordkeeping.
    • C. A vendor need not be a registered broker-dealer to hold records.
    • D. Records must remain the firm's property; transferring ownership to the vendor would violate the rule even if a copy is kept.

  4. Question 4, hard

    A broker-dealer wants to maintain its required books and records exclusively in electronic form through a third-party vendor's system. Beyond storing the records in a non-rewriteable, non-erasable format, what must the firm do to satisfy SEC Rule 17a-4(f)?

    • A.Obtain FINRA's written pre-approval of the specific vendor's software and file the vendor's technical specifications with the SEC's Division of Trading and Markets
    • B.Rely on the vendor's SOC 2 report as the compliance documentation for the system, without a separate notice to its examining authority or a third-party undertaking letter, since the vendor's attestation covers third-party access
    • C.Convert newly created records to the electronic system while leaving existing paper records unconverted, and obtain a written opinion from outside counsel that the system meets the rule
    • D.File a notice with its designated examining authority (DEA) and secure an undertaking letter from a third party with independent access, able to download and produce the records to regulators
    Show answer and explanationHide answer

    Correct answer: D. File a notice with its designated examining authority (DEA) and secure an undertaking letter from a third party with independent access, able to download and produce the records to regulators

    Rule 17a-4(f) conditions electronic-only storage on the firm notifying its designated examining authority of its intent to use such a system and obtaining an undertaking from a third party who has access to the records independent of the broker-dealer and who agrees to provide, and if requested download, those records to the SEC or the firm's DEA upon request. This third-party access requirement exists precisely so that regulators are not dependent on a firm's cooperation (or a vendor under the firm's control) to obtain records during an examination or enforcement action.

    • A. FINRA pre-approval of a specific vendor's software and a filing of its specifications with the SEC are not requirements under Rule 17a-4(f); the rule focuses on the storage medium's characteristics, DEA notice, and third-party access.
    • B. A vendor's SOC 2 report or attestation does not substitute for the DEA notice and the undertaking letter from a third party with independent access that Rule 17a-4(f) specifically requires.
    • C. Converting selectively and obtaining an outside counsel opinion does not satisfy the rule; it does not replace the DEA notice and independent third-party undertaking, and required records on the system must meet its requirements.
    • D. Rule 17a-4(f) requires the firm to notify its designated examining authority and obtain an undertaking letter from a third party with independent access who can download and produce the records to regulators, in addition to the non-rewriteable, non-erasable format requirement.

  5. Question 5, easy

    The 'blotter' required under SEC Rule 17a-3 is best described as a record of:

    • A.Every customer complaint received by the firm, together with a description of the action taken in response to each complaint
    • B.Annual compliance certifications signed by the chief executive officer and the firm's designated principals, with supporting review documentation
    • C.Correspondence between the firm and its customers, including both incoming and outgoing communications retained in chronological order
    • D.Original entries of all purchases and sales of securities, receipts and deliveries of securities, and receipts and disbursements of cash
    Show answer and explanationHide answer

    Correct answer: D. Original entries of all purchases and sales of securities, receipts and deliveries of securities, and receipts and disbursements of cash

    The blotter (or other records of original entry) required under Rule 17a-3 chronologically records securities purchases and sales, receipts and deliveries of securities, and receipts and disbursements of cash, among other original-entry items. It is a foundational books-and-records document distinct from complaint logs, correspondence files, or compliance certifications.

    • A. Incorrect. Complaint records and the firm's responses are governed separately (e.g., under Rule 4530), not by the blotter.
    • B. Incorrect. CEO and principal compliance certifications relate to Rule 3130, not the blotter.
    • C. Incorrect. Correspondence, incoming or outgoing, is a separate books-and-records category with its own retention rules.
    • D. Correct. This is the definition of the blotter/record of original entry under Rule 17a-3.

  6. Question 6, medium

    A principal tells an examiner that, for the first two years of the retention period, SEC Rule 17a-4 requires records to be kept specifically at the firm's main office to satisfy the 'easily accessible place' requirement. Is this an accurate statement of the rule?

    • A.No. The rule only requires an 'easily accessible place,' which is not necessarily the firm's main office
    • B.Yes, the rule specifically requires main-office storage for the first two years
    • C.No. The rule requires records to be kept at the branch office that generated them during the first two years
    • D.No. The rule requires records to be kept at a third-party storage facility approved in advance by the SEC
    Show answer and explanationHide answer

    Correct answer: A. No. The rule only requires an 'easily accessible place,' which is not necessarily the firm's main office

    Rule 17a-4 requires that records be kept in an 'easily accessible place' for the specified initial period (generally the first two years of a three-year retention requirement), but it does not mandate that this location be the firm's main office. Records can be stored at a branch, a third-party facility, or electronically, as long as they can be promptly retrieved and produced. The statement's use of 'always' and 'main office' overstates the actual rule.

    • A. Correct. Rule 17a-4 requires records to be kept in an 'easily accessible place' for the first two years. It does not name the main office, so any location that allows prompt retrieval, including a properly arranged offsite or electronic facility, can satisfy the standard.
    • B. The principal's claim is wrong because the rule does not designate the main office. It sets a general accessibility standard that other locations can meet.
    • C. The rule does not require records to stay at the originating branch office. It sets a general accessibility standard and does not tie records to the branch that produced them, so records may be kept at any location that allows prompt retrieval.
    • D. The rule does not require SEC pre-approval of a third-party storage facility. The firm may keep records at any location that satisfies the 'easily accessible place' standard. Third-party or electronic storage is allowed but not mandated.

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