Do You Know About Recordkeeping Compliance?

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Do You Know About Recordkeeping Compliance? - Quiz

Do you know about recordkeeping compliance? If the organization's records are not stored correctly, there is a considerable chance that they may lose important documents and lack evidence when it is needed. This is why there are laid down procedures to ensure that records are kept in an orderly manner. Do take the quiz and see if you understand them.


Questions and Answers
  • 1. 

    Fill in the blank:SEC Rule 17a-4(b) requires broker-dealers to preserve records of not less than _____ years.

    • A.

      Two

    • B.

      Three

    • C.

      Four

    • D.

      Five

    Correct Answer
    B. Three
    Explanation
    Rule 17a-4(b) requires broker-dealers to preserve certain records for a period of not less than three years.

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  • 2. 

    Fill in the blank:SEC Rule 17a-4(b) requires broker-dealers to preserve certain records for at least three years. What is the required amount of time for these records to be kept in an easily accessible place?

    • A.

      Six months

    • B.

      One year

    • C.

      Two years

    • D.

      Three years

    Correct Answer
    C. Two years
    Explanation
    Every member, broker and dealer subject to § 240.17a-3 shall preserve for a period of not less than three years, the first two years in an easily accessible place.

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  • 3. 

    Which of the following online content is considered static content and needs to be archived?

    • A.

      LinkedIn recommendations

    • B.

      Blog comments

    • C.

      Testimonials

    • D.

      Social media profiles

    Correct Answer
    D. Social media profiles
    Explanation
    Static online content is content that, once published, won’t frequently change. Along with social media profiles, static content also includes websites and blog posts. All static content must be archived.

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  • 4. 

    Which of the following online content is considered interactive content and needs to be archived?

    • A.

      Facebook wall activity

    • B.

      The “About Us” page on your website

    • C.

      Testimonials

    • D.

      Blog post

    Correct Answer
    A. Facebook wall activity
    Explanation
    Interactive content is content that is conversational and encourages discussion. All interactive content must be archived.

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  • 5. 

    Are broker-dealers allowed to use social media?

    • A.

      Yes

    • B.

      No

    Correct Answer
    A. Yes
    Explanation
    In 2013, 19.3% of advisors surveyed by InvestmentNews acquired new clients using social media.

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  • 6. 

    Which tweet by a broker-dealer below would be considered interactive content that needs to be archived?

    • A.

      “I just bought a new car.”

    • B.

      “I just bought shares of ___ car company.”

    Correct Answer
    B. “I just bought shares of ___ car company.”
    Explanation
    c. Both the SEC and FINRA have stated that “the content of the communication is determinative.” This means that the topic and context of the communication will determine if the regulations will apply. If the communication is even tangentially related to the advisor’s business, it must comply with recordkeeping regulations.

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  • 7. 

    When does a firm become “entangled” with third-party content?

    • A.

      An article was written about the firm.

    • B.

      An executive of the firm was quoted in an article about an industry topic.

    • C.

      An article was published after it was reviewed by the firm.

    • D.

      An employee of the firm publishes an article on the firm’s blog.

    Correct Answer
    C. An article was published after it was reviewed by the firm.
    Explanation
    A firm becomes “entangled” when it involves itself with the preparation of the content. For example, a firm that solicits, reviews or approves an article prior to publication is entangled with that article. Firms will need to archive such content.

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  • 8. 

    When does a firm “adopt” third-party content?

    • A.

      An executive of the firm was quoted in an article about an industry topic.

    • B.

      The firm commissions an ad agency to create a billboard ad.

    • C.

      The firm was the subject of an article.

    • D.

      The firm reposts or shares an article on its website, blog or social media site.

    Correct Answer
    D. The firm reposts or shares an article on its website, blog or social media site.
    Explanation
    A firm “adopts” social media content when it explicitly or implicitly endorses or approves content after it has been posted. For example, a firm that reposts an article on its blog, links to an article on its website or sponsors an article has adopted that content. Firms will need to archive such content.

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  • 9. 

    When will emails trigger recordkeeping provisions?

    • A.

      All emails sent from or received by the firm’s domain need to be archived.

    • B.

      Email recordkeeping provisions depend on the content of the email communication.

    • C.

      All emails originating from the firm’s IP address will trigger recordkeeping provisions.

    • D.

      Only emails sent or received during normal operating hours will trigger recordkeeping provisions.

    Correct Answer
    B. Email recordkeeping provisions depend on the content of the email communication.
    Explanation
    Email compliance follows the same provisions as other official written forms of communication. Like interactive social media content, the communication of email content is determinative and compliance only applies to communication that relates to business.

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  • 10. 

    Why does a basic file server or shared drive NOT meet recordkeeping compliance?

    • A.

      File servers and shared drives actually do meet every recordkeeping compliance provision.

    • B.

      It lacks a searchable index.

    • C.

      Digital files do not meet recordkeeping compliance. Physical documents are required.

    • D.

      Many file servers and shared drives do not meet the minimum system requirements as mandated by FINRA.

    Correct Answer
    B. It lacks a searchable index.
    Explanation
    Having document indexing, which facilitates document retrieval, is required by SEC 17a mandates. Without an efficient index, it is difficult to find specific information. Data must be stored on indelible, non-rewritable media.

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  • Current Version
  • Nov 16, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Aug 14, 2014
    Quiz Created by
    LFQuiz
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