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NEW QUESTION: 1
Sam's neighbor has just inherited some bonds from his uncle. The neighbor, knowing that Sam is a
registered representative with a brokerage firm, asks Sam if he would like to handle the sale of these
securities. Sam agrees to do so and calls his existing clients with an offer to sell the bonds at a price that
he researches to be the average "ask" price of dealers in the same bonds. In this situation:
A. Sam has engaged in no illegal practices as long as he markets the bonds only to existing clients. This
is referred to as a private placement.
B. Sam has engaged in the illegal practice of "selling away."
C. Sam has engaged in the illegal practice of "front running."
D. Sam has engaged in no illegal practices since he is licensed to sell bonds and is doing so at an
established "ask" price. Sam is a good neighbor.
Answer: B
Explanation:
If Sam sells his neighbor's bonds by calling his existing clients with an offer to sell them the
bond, he has engaged in the illegal practice of "selling away." This practice is defined as a broker or agent
offering securities for sale that are not owned or offered by his member firm and is in violation of NASD
Rule 3040.
NEW QUESTION: 2
A. Option B
B. Option C
C. Option D
D. Option A
Answer: D
NEW QUESTION: 3
A. Option B
B. Option C
C. Option A
D. Option D
Answer: B,D
