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Financial Services · Series 23

FINRA Series 23 – General Securities Principal – Sales Supervisor Module Exam Practice Test

Series 23 practice focuses on supervisory judgment in securities sales settings. The available questions sample reviewing customer communications, transaction records, registration status, compensation arrangements, and representative conduct. They also address customer-facing situations such as performance claims and account questions, where a principal must weigh accuracy, investor interests, and appropriate firm controls.

Exam overview

Exam providerFinancial Industry Regulatory Authority
Exam codeSeries 23
CategoryFinancial Services

About the FINRA Series 23 – General Securities Principal – Sales Supervisor … Exam

The practice material presents scenarios that require a sales supervisor to identify a potential conduct or control issue and choose a proportionate response. Examples include evaluating testimonials and return claims in promotional content, addressing inaccurate statements in communications, and considering how compensation incentives could affect product recommendations. Other questions involve reviewing confirmations after partial executions, handling discrepancies in transaction details, and ensuring representatives perform only activities for which they are properly registered. Supervisory decisions also touch on customer relationships, such as a representative seeking a loan from a customer, and continuity of service when a representative is unavailable. These scenarios call for careful escalation, documentation, corrective action, and follow-through under firm procedures. The questions provide a way to practice applying supervisory reasoning to day-to-day sales activity rather than merely recalling terminology.

Sample Practice Questions

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

Question 1

A supervisor is reviewing a representative’s proposed social-media post about the firm’s services. The post includes a customer testimonial praising investment results. What should the supervisor consider before permitting publication?

  1. AWhether the testimonial and related disclosures comply with applicable communications requirements and firm procedures
  2. BWhether the customer has at least one year of account history
  3. CWhether the post is published only outside market hours
  4. DWhether the representative removes all references to the firm
Show answerCorrect answer: A

Customer testimonials in securities communications can raise regulatory concerns, including rules and restrictions concerning testimonials, disclosures, and the manner of presentation. The firm should review the content under applicable requirements and its communications procedures before use.

Question 2

A customer asks whether a mutual fund’s past performance means it is likely to outperform its benchmark next year. Which response is most appropriate?

  1. APast performance guarantees similar future results if the fund keeps the same manager
  2. BPast performance is relevant information, but it does not assure future results and should be considered with other factors
  3. CA fund that beat its benchmark last year cannot underperform this year
  4. DThe customer should compare only the fund’s one-year return with the benchmark
Show answerCorrect answer: B

Historical performance may inform an evaluation, but it does not predict or guarantee future returns. A balanced discussion may include longer-term performance, risks, fees, investment approach, and the customer’s objectives rather than relying on a single period.

Question 3

A firm discovers that a customer received a confirmation showing a transaction detail that differs from the firm’s records. What should the supervisor encourage the customer to do?

  1. AIgnore the difference unless the account value is affected
  2. BPromptly contact the firm through an appropriate channel so the discrepancy can be investigated and corrected if needed
  3. CPost the confirmation publicly to request advice
  4. DWait until the next account statement arrives before reporting it
Show answerCorrect answer: B

Transaction discrepancies should be reported promptly through appropriate channels so the firm can investigate the records and take any necessary corrective action.

Question 4

A supervisor finds that a representative has not completed a required securities registration before performing activities that require it. What should the supervisor do?

  1. AStop the representative from performing the activities requiring registration until the registration and firm approvals are in place
  2. BAllow the activity if another representative reviews the trades afterward
  3. CPermit the activity for existing customers only
  4. DAsk the representative to avoid mentioning the activity in firm records
Show answerCorrect answer: A

Individuals generally may not perform activities requiring registration until they are appropriately registered and authorized. Post-transaction review or limiting the activity to existing customers does not cure the registration issue.

Question 5

A principal is reviewing a proposed change to a representative’s compensation arrangement. The change could reward sales of one product more heavily than comparable alternatives. What should the principal focus on?

  1. AWhether the incentive could create a conflict that affects recommendations and how the firm will address it
  2. BWhether the representative prefers the new arrangement
  3. CWhether the product has the highest commission in its category
  4. DWhether customers can be told that all products are equivalent
Show answerCorrect answer: A

Compensation incentives can create conflicts that influence recommendations. The firm should identify and address the conflict through appropriate controls and disclosures, rather than relying solely on the representative’s preferences or a product’s payout.

Question 6

A representative proposes to borrow money from a customer who is not a family member. What should the supervisor’s first concern be?

  1. AWhether the loan has a below-market interest rate
  2. BWhether the arrangement is permitted under applicable rules and firm policy, and whether required approvals or conditions apply
  3. CWhether the customer has previously borrowed from a bank
  4. DWhether the representative plans to repay the loan within one month
Show answerCorrect answer: B

Borrowing from or lending to customers is restricted and may be permissible only in limited circumstances, subject to applicable requirements and firm policies. The supervisor should not treat the arrangement as acceptable based solely on its amount, rate, or expected repayment date.

Question 7

A customer’s order is executed in several partial fills at different prices. What should the firm’s trade confirmation generally reflect?

  1. AOnly the first execution price, to simplify reporting
  2. BThe transaction details required for the customer, including the execution information applicable to the completed order
  3. CThe average price only if the customer requests it in writing
  4. DThe price the customer expected when placing the order
Show answerCorrect answer: B

Trade confirmations must accurately report the transaction as executed and include applicable required details. They should not substitute an expected price or omit execution information merely for convenience; the firm’s procedures should address the treatment of multiple executions.

How to use this practice test

Access is free. A session presents up to 20 randomly selected questions from the 50-question practice bank; results appear after the session. Use missed or uncertain answers to identify which supervisory decisions—such as communications review, registration, or transaction handling—need another pass.

Preparation tips

  • For each communication scenario, distinguish factual accuracy from balanced presentation, and note whether claims about performance or testimonials could mislead customers.
  • Practice identifying the supervisory response to registration gaps: stop or restrict activities requiring registration, then address the issue through firm procedures.
  • Compare compensation proposals by considering whether incentives could favor one product over suitable alternatives or undermine customer-focused recommendations.
  • Review how partial executions and transaction discrepancies affect confirmations, record accuracy, and follow-up with the customer.
  • For conduct scenarios involving customer loans or an absent representative, identify the conflict or service risk and the controls or escalation the supervisor should consider.
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