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Financial Services · Series 14

FINRA Series 14 – Compliance Officer Exam Practice Test

The FINRA Series 14 examines compliance oversight at broker-dealers, including how firms handle regulatory requests, preserve records, and assess proposed business activities. Practice questions address situations such as subpoenas, possible record alteration, compensation arrangements, outside business roles, and operational changes that may create compliance concerns.

Exam overview

Exam providerFinancial Industry Regulatory Authority
Exam codeSeries 14
CategoryFinancial Services

About the FINRA Series 14 – Compliance Officer Exam

Compliance work requires identifying the applicable rules and firm procedures, assessing facts, and documenting a defensible response. A compliance officer may need to coordinate responses to regulator or legal requests, preserve potentially relevant communications and books and records, and escalate signs that records were changed or supervisory reviews cannot be demonstrated. Other decisions involve reviewing compensation for incentives that could conflict with customer interests, evaluating payments to unregistered persons, and assessing employees’ outside business activities. Operational proposals, such as extending trading hours, call for analysis of supervision, staffing, systems, and recordkeeping before implementation. The practice bank samples these judgment tasks through broker-dealer scenarios; it is useful for rehearsing how to identify the compliance issue, determine what information is missing, and select a suitable control or escalation step.

Sample Practice Questions

Review a selection from this exam's published US Practice Tests practice bank.

Question 1

A broker-dealer has offices in several jurisdictions and is reviewing which state-level requirements may apply to its operations. What is the most reliable starting point?

  1. AAssume federal registration automatically satisfies every state requirement
  2. BMap the firm's activities and personnel by jurisdiction, then determine applicable requirements with qualified guidance
  3. CApply the rules of the state where the firm's headquarters are located to all offices
  4. DWait for a state regulator to identify any requirements during an examination
Show answerCorrect answer: B

Applicability can depend on the firm's activities, personnel, and jurisdictional facts. Mapping those facts and assessing relevant requirements is more reliable than assuming one registration or one state's rules resolve all obligations.

Question 2

A broker-dealer discovers that required books and records may have been altered. What should the compliance function prioritize?

  1. APreserve relevant records and escalate the issue through appropriate supervisory and legal channels
  2. BAllow employees to correct the records before documenting the issue
  3. CDelete duplicate copies so only one version remains
  4. DWait until the annual audit to determine whether the alteration was intentional
Show answerCorrect answer: A

Potential record alteration calls for prompt preservation of relevant evidence and appropriate escalation. Uncontrolled changes or deletion could compromise the firm's ability to investigate and meet its obligations.

Question 3

A broker-dealer receives a subpoena seeking employee communications. What should the compliance function generally do?

  1. ACoordinate with counsel, preserve potentially responsive materials, and track the response deadline
  2. BSend all requested materials immediately without reviewing the subpoena's scope
  3. CInstruct employees to discuss the matter only through personal devices
  4. DDestroy messages that are unrelated to customer accounts
Show answerCorrect answer: A

A subpoena should be handled through an orderly process involving counsel and relevant record custodians. Preserving potentially responsive materials and tracking deadlines helps avoid obstruction, loss of evidence, and incomplete responses.

Question 4

A firm is reviewing an employee's request to make a charitable contribution using firm funds. Which control best supports appropriate handling of the request?

  1. AAllow the employee to make the payment and report it only if asked
  2. BRequire review under the firm's approval process, including any applicable political or charitable contribution controls
  3. CApprove the request automatically if the recipient is a nonprofit organization
  4. DPermit payment from a customer account if the customer has previously donated to the organization
Show answerCorrect answer: B

Firm-funded contributions should follow established approval and documentation controls, including any applicable restrictions or review requirements. The recipient's nonprofit status does not by itself eliminate compliance considerations, and customer funds must not be used without proper authorization and basis.

Question 5

A broker-dealer is considering extending its trading hours. Which compliance consideration is most important before the change takes effect?

  1. ADetermine whether the change affects applicable regulatory obligations, supervision, and operational controls, and address any gaps before launch.
  2. BAssume existing procedures apply without review because the firm is not changing its products.
  3. CWait until the first customer complaint to decide whether additional controls are needed.
  4. DAsk each trading employee to determine individually which rules apply during the new hours.
Show answerCorrect answer: A

A material change in business hours can affect supervision, staffing, trade handling, and other compliance controls. The firm should assess the relevant obligations and ensure controls are effective before implementation.

Question 6

A firm receives a request to pay a commission to a person who is not associated with the firm and is not registered as a broker. What should compliance do first?

  1. AApprove payment if the person provided a customer introduction.
  2. BAssess the proposed arrangement under applicable registration and compensation rules before any payment is made.
  3. CPay the amount as a consulting fee to avoid treating it as a commission.
  4. DAllow the business unit to decide based on the size of the payment.
Show answerCorrect answer: B

Transaction-based compensation for securities activity can raise broker-registration concerns. The firm should evaluate the person's activities and the arrangement under applicable rules before proceeding; relabeling compensation does not resolve the underlying issue.

Question 7

A broker-dealer's compliance officer is assessing whether the firm can demonstrate that required supervisory reviews were completed. Which recordkeeping practice is most useful?

  1. ARetain records showing the review performed, its date, the reviewer, and the disposition of identified issues
  2. BKeep only a summary of the number of reviews completed each quarter
  3. CRely on supervisors to describe their review practices if asked
  4. DDelete review records after any issue found has been corrected
Show answerCorrect answer: A

A documented review trail helps demonstrate that supervision occurred and shows how exceptions were handled. A count or verbal account alone provides less evidence, while deleting records can undermine the firm's ability to establish its process.

How to use this practice test

Access the free Series 14 practice questions in sessions of up to 20 randomly selected items from the available bank. After each session, review your results and revisit any scenarios where you missed a compliance response, such as handling a subpoena or evaluating an outside business activity.

Preparation tips

  • For regulator requests and subpoenas, map the response steps: identify the request’s scope, preserve relevant records, involve the appropriate legal or compliance personnel, and document handling.
  • Practice distinguishing record-retention concerns from evidence of possible alteration; identify preservation and escalation actions before routine record correction.
  • When evaluating compensation or payments to unregistered persons, identify the arrangement’s purpose, recipients, services, and potential conflicts or registration concerns.
  • For proposed changes to trading hours or employee outside business roles, list the supervision, systems, disclosures, approvals, and records that may need review before implementation.
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