SIE Understanding Products and Their Risks Question 3: Answer and Explanation

Question: 3

A broker-dealer is required to be a member of which of the following organizations?

• A. Financial Industry Regulatory Authority (FINRA)
• B. Securities Exchange Commission (SEC)
• C. New York Stock Exchange (NYSE)
• D. Better Business Bureau (BBB)

Correct Answer: A

Explanation:

A: A broker-dealer is required to be a member of the Financial Industry Regulatory Authority (FINRA). Choice B is the organization that regulates the securities industry and does not require a broker-dealer to be a member. Choice C is a stock exchange regulated by the SEC and does not require a broker-dealer to be a member. Choice D is a nonprofit corporation that reflects whether complaints have been issued regarding businesses, charities, and nonprofit organizations and does not offer memberships.