Free FINRA SIE (Securities Industry Essentials) Understanding Trading, Customer Accounts and Prohibited Activities Practice Questions
Understanding trading, customer accounts, and prohibited activities on the FINRA SIE exam covers order types, trade settlement, account types (cash, margin, retirement), suitability, and prohibited practices including insider trading and market manipulation.
Sample Questions
Question 1
Easy
A company declares a cash dividend. Which date determines which shareholders are entitled to receive that dividend?
Solution
Choice C is correct because the record date is the date set by the company to determine which shareholders are officially registered as owners and therefore entitled to receive the declared dividend.
Question 2
Medium
A broker-dealer's AML compliance program must include all of the following elements EXCEPT:
Solution
Choice B is correct as the answer to 'EXCEPT' because an AML program does not require automatic approval of accounts based solely on credit checks. Instead, broker-dealers must implement a Customer Identification Program (CIP) that verifies identity using government-issued identification and risk-based due diligence.
Question 3
Hard
Under FINRA Rule 5130, which of the following individuals would be considered a "restricted person" prohibited from purchasing shares in a hot IPO at the public offering price?
Solution
Choice C is correct because FINRA Rule 5130 defines restricted persons to include portfolio managers — specifically, any person who has authority to buy or sell securities for a bank, savings institution, insurance company, investment company, investment adviser, or collective investment account. A hedge fund portfolio manager with authority over the fund's trading falls squarely within this definition, regardless of the prime brokerage relationship.