Product Information: Investment Company Securities & Variable Contracts
Securities & Tax Regulation
Marketing, Prospecting & Sales Presentations
Opening & Servicing Customer Accounts
100
(1) An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. (2) The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.
What is a Broker
100
Anyone in a position to influence decisions made in a corporation, including officers, directors, principal stockholders and members of their immediate families. Their shares are often referred to as control stock.
What is Affiliated Person
100
FINRA's formal procedure for handling trade practice complaints involving violations of the Conduct Rules. The Department of Enforcement is the first body to hear and judge complaints.
What is Code of Procedure
100
Written or electronic communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period.
What is Correspondence
100
Account in which a custodian enters trades on behalf of the beneficial owner, usually a minor.
What is Custodial Account
200
The number of shares of stock that a corporation may issue. This number of shares is stipulated in the corporation's state approved charter and may be changes by a vote of the corporation's stockholders.
What is Authorized Stock
200
A commission or sales fee that is charged when mutual fund shares or variable annuity contracts are redeemed. It is typically found with Class B shares (and for one year with Class C shares). It declines annually, decreasing to zero over an extended holding period - up to eight years - as described in the prospectus.
What is Back-End Load
200
ESAs. which are also known as Education IRAs, may be established for the purpose of paying qualified education expenses for the designated beneficiary of the account. Although contributions to ESAs are not tax deductible, the distributions are tax-free as long as the distributions are taken to pay for allowable educational expenses. The maximum annual contribution is $2.000 per beneficiary
What is Coverdell Education Savings Account (ESA)
200
The schedule of sales charge discounts a mutual fund offers for lump-sum or cumulative investments.
What is Breakpoint
200
Excessive trading in a customer account by a registered representative who ignores customer interests and seeks only to increase commissions. Violates the Conduct Rules.
What is Churning
300
A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages: expansion, peak, contraction & trough.
What is Business Cycle
300
The equity issues of financially stable, well-established companies that have demonstrated their ability to pay dividends in both good and bad times. Generally these are large-cap stocks.
What is Blue-Chip Stock
300
Nickname for state regulations governing the securities industry. Coined in 1911 by a Kansas Supreme Court justice who wanted regulation to protect against "speculative schemes that have no more basis than so many feet of blue sky."
What is Blue-Sky Laws
300
A class of mutual fund share issued with a level load. A mutual fund offers different classes of shares to allow investors to choose the type of sales charge they will pay.
What is Class C Share
300
FINRA's program enabling the public to check on the disciplinary and registration history of any registered person and firm.
What is BrokerCheck
400
Any employee, manager, director, officer or partner of a member broker/dealer or another entity (issuer, bank, etc..) or any person controlling, controlled by or in common control with that member.
What is Associated Person of a Member (AP)
400
Individuals elected by stockholders to establish corporate management policies.
What is Board of Directors (BOD)
400
A set of rules established by NASD (now FINRA) regulating the ethics employed by members in conduct of their business.
What is Conduct Rules
400
An option available to mutual fund shareholders whereby fund dividends and capital gains distributions are automatically reinvested back into the fund.
What is Automatic Reinvestment
400
(1) Anything that an individual or a corporation owns. (2) A balance sheet item expressing what a corporation owns.
What is Asset
500
Any person who opens a trading account with a broker/dealer. A customer may be classified in terms of account ownership, trading authorization, payment method or types of securities traded.
What is a Customer
500
A risk management technique that mixes a wide variety of investments within a portfolio, thus minimizing the impact of any one security on overall portfolio performance.
What is Diversification
500
FINRA maintains the qualification, employment and disciplinary disclosure histories of the more than half a million registered securities employees of member firms through the automated, electronic Web CRD system. You can go to the FINRA Website to get CRD information or call them toll-free.
What is Central Registration Depository (CRD)
500
The sale of mutual fund shares in an amount just below the level at which the purchaser would qualify for reduced sales charges. Violates the Conduct Rules.
What is Breakpoint Sale
500
Printed document that states the trade date, settlement date and money due from or owed to a customer. It is sent or given to the customer on or before the settlement date.