Series 24 Practice Test – Supervision and Compliance

🧾 Series 24 Practice Test – Supervision and Compliance
📘 Sharpen Your Knowledge of Key FINRA Rules and Responsibilities

The Series 24 exam, also known as the General Securities Principal Exam, qualifies individuals to supervise or manage branch activities and associated persons of a broker-dealer. The test is heavy on supervision, compliance procedures, regulatory filings, and disciplinary actions. Below is a 10-question simulation focused specifically on Supervision and Compliance – a high-weighted section of the exam.

✅ Instructions

• Format: 10 multiple-choice questions
• Suggested time: 20 minutes (2 minutes per question)
• Check your score and review explanations after completing all questions

🔢 Practice Questions – Supervision and Compliance

1. A registered principal is responsible for which of the following supervisory activities?
A) Recommending municipal securities to retail clients
B) Approving customer accounts and transactions
C) Managing client portfolios
D) Executing customer trades on an agency basis

2. FINRA requires a firm’s Written Supervisory Procedures (WSPs) to be:
A) Reviewed every five years by outside counsel
B) Sent to all clients annually
C) Tailored to the firm’s business model and reviewed annually
D) Filed with FINRA on a quarterly basis

3. Which of the following communications must be pre-approved by a principal before use?
A) Internal emails between registered reps
B) Correspondence sent to fewer than 25 retail investors
C) Retail communications with performance projections
D) Communications solely with institutional investors

4. If a registered representative receives a written customer complaint, the principal must:
A) Disregard it if the client has not lost money
B) Respond within 3 business days
C) Forward it to FINRA within 10 calendar days
D) Retain the complaint and ensure proper documentation and resolution

5. What is the annual requirement for a firm’s compliance meeting with registered representatives?
A) It must be conducted by the CEO
B) It must be conducted in person and recorded
C) It must be held once per year and documented
D) It must include client participation for transparency

6. Which of the following statements is TRUE about the OSJ (Office of Supervisory Jurisdiction)?
A) An OSJ cannot approve advertising
B) All OSJs must be registered with FINRA
C) An OSJ does not need a designated principal
D) OSJs supervise only proprietary trading activities

7. Which activity would most likely trigger a disciplinary report under FINRA Rule 4530?
A) Client transferring an account
B) Late monthly statement to a client
C) Termination of a rep for violating firm policy
D) Missed internal sales quota by a rep

8. A firm’s annual certification of compliance and supervisory processes must be signed by:
A) All branch managers
B) The Chief Compliance Officer only
C) The CEO or equivalent senior executive
D) The FINRA district director

9. What’s the regulatory requirement when a rep is under internal review for potential fraud?
A) No action unless charges are filed
B) File a U5 with “under investigation” status
C) Report to FINRA within 30 days if a violation is confirmed
D) Immediate reporting to the SEC regardless of outcome

10. How often must a registered principal review and approve customer account activity?
A) Monthly
B) Annually
C) Promptly after execution
D) Periodically, as specified in the firm’s WSP

🧠 Answer Key and Explanations

1. ✅ B – Approving accounts and transactions is a core principal duty.
2. ✅ C – WSPs must be customized and reviewed at least annually.
3. ✅ C – Retail communications with performance content require principal pre-approval.
4. ✅ D – All written complaints must be retained and handled per firm procedures.
5. ✅ C – Compliance meetings must be held annually and documented, not necessarily in-person.
6. ✅ B – All OSJs must be registered with FINRA and supervised by a principal.
7. ✅ C – Termination due to misconduct must be reported under FINRA Rule 4530.
8. ✅ C – The CEO or equivalent must sign the annual compliance certification.
9. ✅ C – Report to FINRA within 30 days if there’s a confirmed rule violation.
10. ✅ D – Customer activity must be reviewed periodically per WSPs, not on a fixed monthly basis.

📊 Scoring

• 9–10 correct: Strong command of compliance rules
• 7–8 correct: Solid base, review nuanced areas
• 5–6 correct: Needs more practice with procedures and timing
• <5 correct: Review WSPs, OSJ roles, Rule 4530, and complaint handling

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Master the rules. Lead with compliance. Pass with confidence.