Series 24 Practice Questions and Explanations

🧾 Series 24 Practice Questions and Explanations
📘 Sharpen Your Understanding of FINRA Rules and Supervision Requirements

The Series 24 exam qualifies candidates to supervise or manage branch activities of a broker-dealer. Below is a curated set of practice questions that test your knowledge of regulatory rules, sales supervision, communications, and financial responsibility — along with clear explanations.

✅ Question 1: Retail Communication Filing

A registered rep creates a new social media ad promoting a new mutual fund offering. Which of the following statements is TRUE regarding filing requirements?

A) It must be pre-approved and filed within 10 business days after first use
B) It must be pre-approved and filed 10 business days prior to use
C) It does not need to be filed if only distributed to institutional investors
D) It must be approved by FINRA and the SEC before use

✅ Answer: B) – It must be pre-approved and filed 10 business days prior to use

Explanation: FINRA Rule 2210 requires new member firms to file retail communications with FINRA at least 10 business days prior to first use during their first year of operation.

✅ Question 2: Supervisory Control System

FINRA Rule 3120 requires firms to do which of the following annually?

A) Submit a Statement of Financial Condition to FINRA
B) Submit a report to senior management on supervisory procedures
C) Conduct anti-money laundering testing
D) File Form BD-A with the SEC

✅ Answer: B) – Submit a report to senior management on supervisory procedures

Explanation: Rule 3120 requires an annual report to senior management detailing the firm’s system of supervisory controls and procedures for detecting/reporting rule violations.

✅ Question 3: Outside Business Activities

A registered representative wants to teach a financial literacy course at a local college for a small stipend. Which of the following is TRUE?

A) They must notify their firm in writing
B) They must receive firm approval and notify FINRA
C) No disclosure is needed if the activity is unrelated to securities
D) They are prohibited from outside employment

✅ Answer: A) – They must notify their firm in writing

Explanation: FINRA Rule 3270 requires written notification to the firm for any outside business activity, regardless of whether it relates to securities.

✅ Question 4: Insider Trading Enforcement

If a supervisor learns that a rep is likely trading on nonpublic material information, what is the most appropriate action?

A) Wait for more evidence
B) Alert the client immediately
C) Notify the SEC
D) Escalate the issue to compliance or legal

✅ Answer: D) – Escalate the issue to compliance or legal

Explanation: Supervisors must escalate possible insider trading concerns internally before taking further action. Failure to do so may expose the firm to liability.

✅ Question 5: Branch Office Supervision

How often must branch offices be inspected under FINRA rules?

A) Monthly
B) Annually
C) At least every 3 years
D) Every 6 months

✅ Answer: C) – At least every 3 years

Explanation: FINRA requires periodic inspection of branch offices, with a maximum interval of three years. High-risk branches may need more frequent review.

✅ Question 6: Municipal Securities Rulemaking Board (MSRB) Rules

Which of the following individuals must be registered under MSRB rules?

A) A retail clerk working on trade reconciliation
B) A sales supervisor at a broker-dealer handling municipal bonds
C) An IT administrator managing order systems
D) A shareholder of the firm

✅ Answer: B) – A sales supervisor at a broker-dealer handling municipal bonds

Explanation: Individuals supervising municipal securities activities must be registered with the MSRB, as per Rule G-3.

✅ Question 7: AML Program Oversight

Who must approve a firm’s anti-money laundering compliance program?

A) The CFO
B) The Chief Legal Officer
C) A member of senior management
D) A designated AML committee

✅ Answer: C) – A member of senior management

Explanation: FINRA and the Bank Secrecy Act require that a firm’s AML program be approved by senior management, typically annually.

✅ Question 8: Business Continuity Plan (BCP)

Under FINRA Rule 4370, what must a firm disclose to clients?

A) Detailed technical systems and procedures
B) BCP approval by FINRA
C) Summary of the BCP, including how it protects client assets
D) Employee contact list

✅ Answer: C) – Summary of the BCP, including how it protects client assets

Explanation: Firms must provide a BCP summary that outlines how they’ll handle significant disruptions and protect client data and assets.

🚀 Want More Series 24 Practice Sets?

Get 100+ rule-focused practice questions, supervisor simulations, and regulatory flashcards:
👉 https://finra-exam-mastery.com

Train like a principal. Think like compliance. Pass like a pro.