FINRA Updated SIE Exam Questions and Answers by ciara

A broker-dealer must disclose business continuity plan information to customers at account opening. The disclosure must explain how the firm intends to respond to events that could significantly disrupt business operations, such as natural disasters, technology failures, loss of facilities, or other emergencies. The purpose is not to give customers every operational detail, but to provide meaningful information about how the firm plans to continue or resume critical business functions. Choice A is correct because account opening is the required timing. Choice B is incorrect because waiting until a disruption occurs would defeat the purpose of advance disclosure. Choice C is incorrect because the rule does not set a 60-day post-opening disclosure deadline. Choice D is incomplete because a firm must provide the disclosure at account opening and also make it available in other required ways, such as upon request. The SIE outline includes business continuity plans under books and records and privacy requirements, and lists FINRA Rule 4370, Business Continuity Plans and Emergency Contact Information. Reference: Section 3.2.4 Books and Records and Privacy Requirements; FINRA Rule 4370.

Step by Step Explanation:

SIPC Coverage: Protects customers of brokerage firms against the loss of securities and cash due to broker-dealer insolvency, but it does not protect against market losses.

FDIC Coverage: Protects bank deposits (checking, savings, CDs) up to $250,000 per depositor, per institution.

Incorrect Options:

A: SIPC covers both securities and cash held at brokerage firms (within limits).

C & D: Money market mutual funds are not FDIC insured, and securities are not covered by the FDIC.

SIPC Overview: SIPC Coverage.

FDIC Insurance: FDIC Coverage.

The cooling-off period begins after the registration statement is filed with the SEC and lasts for at least 20 days. During this time, the issuer and underwriters can market the securities but cannot finalize sales.

D is correct because marketing (e.g., roadshows) is permitted during the cooling-off period.

A is incorrect because the final prospectus is distributed after the offering is effective.

B and C are incorrect because sales and deliveries are prohibited until the registration becomes effective.

The correct answer is A, $2,000. A Coverdell Education Savings Account (ESA) is a tax-advantaged account designed to help families save for qualified education expenses, including both K–12 and higher education costs. One of the key features tested on the SIE exam is the annual contribution limit, which is $2,000 per beneficiary per year, regardless of the number of contributors.

This contribution limit is relatively low compared to other education savings vehicles, such as 529 plans, which generally allow much higher contributions. Additionally, contributions to a Coverdell ESA are not tax-deductible, but earnings grow tax-deferred, and withdrawals are tax-free if used for qualified education expenses.

The other answer choices are incorrect because they do not reflect IRS rules. $6,500 is closer to IRA contribution limits, not Coverdell accounts. $75,000 is far above any permitted annual contribution and is unrealistic for this type of account. Choice D refers to a concept used in 529 plan withdrawal limits for room and board but has no relevance to ESA contribution limits.

Thus, remembering the fixed $2,000 annual contribution cap is essential for SIE exam success.