FINRA Series 7 Exam Prep

Category - Series 7

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Under what conditions may an FINRA member firm sell an IPO to an employee of another broker/dealer?

if the amount of the purchase is small and the transaction accords with the employee’s normal investment practice
if the member firm notifies the other broker/dealer of the transaction
if the employing broker/dealer guarantees that resale of the securities acquired by its employee will be restricted for two years
under no circumstances

Explanation

Answer: D - under no circumstances. An FINRA member firm may not, under any circumstances, allocate shares to itself, any of its employees, or to any employee of a firm that underwrites securities.

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FINRA Series 7 Exam Prep

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