FINRA Series 14 Practice Test & Mock Exam

Series 14 rewards candidates who can think like a compliance officer, connect business activity to the right control framework, and document or escalate issues before they become reporting failures. If you are searching for Series 14 sample questions, a practice test, mock exam, or simulator, this is the main Securities Prep page to start on web and continue on iOS or Android with the same account. This page includes 24 sample questions with detailed explanations so you can try the exam style before opening the full app question bank.

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What this Series 14 practice page gives you

• a direct route into the Securities Prep simulator for Series 14
• 24 sample questions with detailed explanations across the main Series 14 compliance buckets
• targeted practice around compliance controls, monitoring, reporting, and recordkeeping discipline
• detailed explanations that show why the strongest compliance response is the most defensible
• a clear free-preview path before you subscribe
• the same subscription across web and mobile

Series 14 exam snapshot

• Provider: FINRA
• Exam: Compliance Officer Qualification Exam
• Practice reference: 110 practice questions in 180 minutes
• Registration context: principal-level compliance qualification with no stated corequisite

Topic coverage for Series 14 practice

• Compliance framework: building and maintaining compliance processes, policies, and monitoring structure
• Reporting and documentation: recordkeeping, evidence, and reporting obligations
• Escalation and remediation: identifying risk, choosing the right control, and escalating or remediating appropriately

What Series 14 is really testing

Series 14 is primarily a compliance-control-and-escalation exam:

• classifying the issue correctly before deciding whether it is a surveillance, reporting, books-and-records, registration, communication, or financial-responsibility problem
• recognizing that the strongest answer usually contains containment, escalation, remediation, and documentation
• distinguishing commercial convenience from defensible compliance process
• understanding that exception review, evidence retention, and follow-up testing are part of the answer, not afterthoughts
• choosing the response that reduces regulatory exposure and leaves a clean audit trail

Common question styles

• What should compliance do next?: restrict activity, investigate, escalate, amend, report, or document
• What control failed?: surveillance review, written procedure, retention step, registration check, or communication approval
• What makes the answer defensible?: evidence of review, exception handling, supervisory sign-off, and corrective follow-through
• What changed the answer?: business line, customer impact, reporting trigger, timing, or books-and-records consequence
• What is the real risk?: customer harm, misleading communication, capital or custody stress, registration lapse, or information-barrier failure

High-yield pitfalls

• treating a recurring exception as a one-off instead of a control-gap signal
• solving the immediate problem but failing to document or retain evidence of the review
• picking a commercially easy answer that skips escalation or written-procedure follow-through
• forgetting that communications, telemarketing, and registration problems are compliance issues before they become enforcement issues
• ignoring the financial-responsibility implication when customer protection or capital pressure appears
• assuming experienced staff can substitute for a written, testable, auditable process

How Series 14 differs from similar routes

How to use the Series 14 simulator efficiently

1. Start with reporting and escalation drills so the compliance workflow becomes easy to recognize.
2. Review every miss until you can explain which control applies and what evidence should exist.
3. Move into mixed sets once you can shift between monitoring, documentation, and remediation scenarios without slowing down.
4. Finish with timed runs so the three-hour pace feels steady.

Free preview vs premium

• Free preview: 24 public sample questions on this page plus the web app entry so you can validate the question style and explanation depth.
• Premium: the full Series 14 practice bank, focused drills, mixed sets, timed mock exams, detailed explanations, and progress tracking across web and mobile.

Free samples and full bank

• Live now: this exact practice route is available in Securities Prep on web, iOS, and Android.
• On-page sample set: this page includes 24 public sample questions from the current practice coverage.
• Full app: open the Securities Prep web app or mobile app for broader timed coverage.

Good next pages after Series 14

• Series 24 if you want the broader principal-supervision route beside compliance-officer work
• Series 27 or Series 28 if the real target is FINOP-level financial and operational responsibility
• Series 99 if you are comparing principal-level compliance with operations workflow coverage
• FINRA if you want the broader specialist and principal route map first

Free review resources

Use these free SecuritiesMastery.com resources for concept review, then return to this page when you are ready to practice in Securities Prep.

• Series 14 Cheat Sheet
• Series 14 Study Guide

Focused sample questions

Use these focused Series 14 sample-question pages when you want to isolate one official topic area before returning to the mixed simulator.

• Regulatory Agencies
• Markets and Operations
• Broker-Dealer Operations
• Credit and Capital
• General Supervision
• Investment Banking
• Registration
• Customer and Employee Accounts
• Sales Solicitations
• Free Series 14 Full-Length Practice Exam

24 Series 14 sample questions with detailed explanations

These sample questions cover multiple blueprint areas for Series 14. Use them to check your readiness here, then move into the full Securities Prep question bank for broader timed coverage.

Question 1

Topic: Function 2 — Markets and Operations

A firm identifies a recurring pattern of trade errors: equity orders are entered with incorrect limit prices, leading to executions materially worse than the NBBO. Which choice best describes a preventive control and a management reporting metric that align with a best execution supervisory program to reduce recurrence?

• A. Pre-trade limit-price reasonability edits and monthly error/price-worse-than-NBBO exception rates by desk
• B. Post-trade customer confirmations and monthly total commissions by desk
• C. Annual WSP attestation and monthly average trade size by symbol
• D. Annual best execution training and quarterly customer complaint counts

Best answer: A

Explanation: Best execution supervision is strengthened when controls prevent avoidable execution-quality harm before orders route to market and when management receives metrics that directly measure execution-quality exceptions. A pre-trade limit-price reasonability check targets the root input error. Trending error and NBBO-related exceptions by desk helps compliance identify where to escalate, retrain, or adjust controls.

Question 2

Topic: Function 3 — Broker-Dealer Operations

Your equity trading desk uses an algorithm to stage MOC/LOC orders and, when needed, asks a NYSE Designated Market Maker (DMM) to “help source liquidity” into the closing auction. Surveillance generates an alert suggesting a potential conflict between customer MOC flow and a late proprietary order that may have been influenced by DMM communications.

Exhibit: Alert snapshot (ABC, March 12, 2026)

15:45:10  Cust MOC SELL  80,000  (routed to NYSE close)
15:58:40  Trader chat: "DMM says bigger sell imbalance than feed shows. We can buy into close."
15:59:52  Prop MOC BUY   75,000  (routed to NYSE close)
16:00:00  Closing auction prints at a higher price than 15:59:50 last sale

As the compliance official, what is the BEST next step in the investigation sequence?

• A. File an external manipulation report to regulators based solely on the surveillance alert and price move
• B. Pull the full order/auction message audit trail and the DMM communication, then assess whether nonpublic imbalance information or customer-order priority was misused before deciding on escalation
• C. Document the rationale and close the alert because DMMs routinely facilitate the closing auction
• D. Immediately restrict the desk from using DMM facilitation for all closing auctions

Best answer: B

Explanation: Closing-auction issues hinge on whether the firm used nonpublic imbalance/order information and whether customer orders were handled fairly versus proprietary interest. The right next step is to preserve and review the complete electronic audit trail for the auction-related orders and the related DMM communications, then determine if escalation or remediation is warranted based on evidence.

Question 3

Topic: Function 3 — Broker-Dealer Operations

A compliance officer is reviewing a customer’s accumulation of a public company’s voting shares. The officer wants to confirm which filing is intended to provide detailed beneficial ownership disclosure about the acquirer’s purpose of the transaction and any plans or proposals to influence or change control of the issuer after exceeding 5% ownership.

Which filing best matches this feature?

• A. Form 4
• B. Schedule 13G
• C. Schedule 13D
• D. Form 13F

Best answer: C

Explanation: Schedule 13D is designed for situations where a 5%+ beneficial owner must disclose the purpose of the acquisition and any plans to influence management or control. It is the market’s “full” beneficial ownership disclosure regime under Section 13(d) when the investor is not eligible to use the streamlined Section 13(g) approach.

Question 4

Topic: Function 2 — Markets and Operations

A broker-dealer is considering tuning a spoofing surveillance scenario by increasing the cancel-to-fill alert threshold. The firm’s surveillance governance standard requires (1) backtesting against a “known-issues” set with at least 90% capture and (2) estimated monthly alert volume at or below the team’s capacity of 1,000 alerts.

Exhibit: Backtest and volume estimate

As the compliance official, what is the best decision and documentation approach for this tuning request?

• A. Approve the change and document a plan to sample alerts post-implementation
• B. Implement immediately; document results after one month of production use
• C. Approve the change and document that alerts drop below capacity
• D. Do not approve; document failed capture-rate validation and require retuning

Best answer: D

Explanation: Governance for surveillance tuning requires validating performance against predefined standards and keeping defensible evidence of the decision. Here, the proposed threshold meets the operational capacity target (920 -80 1,000) but fails the required backtest capture rate. Because 17 of 20 known-issues events are captured, the change should not be approved as-is.

Question 5

Topic: Function 9 — Sales Practice - Solicitations

Which statement is most accurate regarding supervising complaint intake and escalation for telemarketing (cold-calling) conduct?

• A. A written customer allegation (including email) about an improper solicitation call should be logged as a complaint and promptly escalated for investigation under WSPs, even if no trade occurred.
• B. Once the firm apologizes to the customer for a calling-hours violation, the matter may be closed without creating a record if no further contact occurs.
• C. If a customer asks to be placed on a do-not-call list, the request does not need to be documented unless the customer also alleges a sales practice violation.
• D. Only signed, mailed letters qualify as telemarketing complaints; emails and web-form submissions may be handled informally.

Best answer: A

Explanation: Telemarketing complaints should be supervised through a controlled intake workflow that captures written allegations (including electronic communications), routes them to the appropriate supervisory/compliance reviewers, and documents investigation and resolution. The obligation is driven by the allegation of improper solicitation conduct and the firm’s need to evidence supervision and remediation, not by whether a trade resulted.

Question 6

Topic: Function 5 — General Supervision

A broker-dealer is preparing to place a private offering for an issuer client. The Compliance Official is asked to approve compensation to two unregistered, non-associated persons:

• Arrangement 1: An accounting firm will receive a one-time fixed $2,500 “introduction fee” for providing contact information for up to five potential accredited investors. The firm will not discuss the offering, recommend the investment, negotiate terms, handle funds, or participate in any sales meetings.
• Arrangement 2: A “capital introduction consultant” will receive 1% of the total dollars raised from investors the consultant introduces. The consultant will attend investor calls to describe the issuer and answer questions.

Which compliance treatment best matches these two arrangements?

• A. Permit both arrangements if payments are made by the issuer rather than the broker-dealer
• B. Permit Arrangement 1 with controls; prohibit Arrangement 2 unless the person is properly registered/associated
• C. Prohibit Arrangement 1 because any payment for a referral requires registration; permit Arrangement 2 because it is a consultant contract
• D. Permit both arrangements if the issuer discloses the payments in the offering materials

Best answer: B

Explanation: Payments tied to securities sales activity are a key red flag for unregistered brokerage activity. A fixed, nominal fee for a mere introduction—paired with strict limits preventing solicitation or participation—can be structured with supervisory controls. By contrast, a success fee and participation in investor discussions indicate broker activity and require proper registration/association.

Question 7

Topic: Function 4 — Credit Regulation/Capital Requirements

A broker-dealer was a lead underwriter in an IPO that priced five business days ago. Surveillance generates an alert that a retail customer is attempting to purchase the IPO shares in a margin account with the firm extending 50% credit (the customer plans to pay the rest after settlement). The desk supervisor asks Compliance if the trade can proceed.

As the compliance official, what is the best next step in the correct workflow sequence given the high-level concept of Exchange Act Section 11(d)(1) (credit on new issues by a distribution participant)?

• A. Allow the margin purchase because the stock is now exchange-listed
• B. Let the trade proceed and address the issue only if a complaint is received
• C. Stop the margin order and require a fully paid cash purchase or a 30-day wait
• D. Allow the margin purchase if the customer is accredited and signs a disclosure

Best answer: C

Explanation: Section 11(d)(1) is a restriction on a broker-dealer that participated in a distribution extending or maintaining credit to customers to buy or carry that new issue during the restricted period. The proper compliance sequence is to prevent the extension of credit before it occurs by blocking the margin financing and converting the transaction to a fully paid cash purchase (or delaying until the restriction no longer applies). Documentation and supervisory notification follow that immediate risk stop.

Question 8

Topic: Function 5 — General Supervision

Which statement is most accurate about delegating supervisory duties under FINRA Rule 3110?

• A. Once a task is delegated in writing, the delegating supervisor is no longer responsible for that activity.
• B. Supervisory duties may be delegated to any employee if the employee follows a checklist.
• C. Delegating supervision to a third-party vendor eliminates the need for the firm to maintain written supervisory procedures for that function.
• D. A firm may delegate supervisory tasks, but accountability remains with designated supervisors and the firm.

Best answer: D

Explanation: FINRA Rule 3110 allows a firm to assign supervisory tasks to others, including through a supervisory structure, but it does not allow the firm or its designated supervisors to disclaim responsibility. The firm must maintain a system reasonably designed to achieve compliance and be able to evidence that supervision occurred.

Question 9

Topic: Function 3 — Broker-Dealer Operations

Which statement is most accurate/correct regarding applying risk-limit controls to high-volume basket activity (including DMA and algorithmic “child” orders)?

• A. Effective controls include automated pre-trade blocks and intraday monitoring that aggregates basket and firmwide exposure (e.g., notional and message-rate) and can immediately prevent additional orders when limits are breached, with the controls kept under the broker-dealer’s control.
• B. If each individual child order is below a preset maximum size, no additional aggregation or intraday controls are necessary for basket activity.
• C. End-of-day exception reports are sufficient risk limits for basket trading when the customer is an institution.
• D. A broker-dealer may rely on a customer’s written attestation that its vendor-hosted controls will prevent limit breaches, as long as the firm reviews the controls annually.

Best answer: A

Explanation: High-volume basket activity can create rapid, correlated exposure that won’t be captured by per-order checks or end-of-day reviews. The most accurate statement describes automated controls that work both pre-trade and intraday, measure aggregated exposure (including basket-level effects), and can block or halt additional order flow. A key compliance requirement is that these controls remain under the broker-dealer’s control.

Question 10

Topic: Function 4 — Credit Regulation/Capital Requirements

In a broker-dealer margin supervision program, a “credit/margin exception log” is best defined as a record used to:

• A. Evidence delivery of margin disclosures and customer loan consents
• B. Document the approver, rationale, risk mitigants, and follow-up for credit overrides
• C. Calculate daily margin equity and generate maintenance margin calls
• D. Track stock borrow/loan activity used to facilitate short sales

Best answer: B

Explanation: A credit/margin exception log supports supervision by capturing the “who/why/what next” for overrides to standard credit terms. It is the control record that demonstrates a reasoned supervisory decision, any conditions imposed to mitigate risk, and the remediation steps and closure evidence.

Question 11

Topic: Function 6 — Investment Banking

Your firm is advising BidderCo on a planned cash tender offer for TargetCo. The investment banking VP says compliance was “told verbally” to wall-cross the deal team and “put TargetCo on a list,” but no written record can be located. The next day, surveillance flags a spike in the firm’s proprietary market-making purchases of TargetCo shares.

Exhibit: Tender-offer control log (snapshot)

Issuer: TargetCo
Project: BidderCo tender offer (planned)
Date opened: July 8, 2025
Restricted list entry: (blank)
Wall-cross approval: “verbal” (no approver/date)
Notified trading desks: (blank)
Case opened for trading review: (blank)

As the compliance official, what is the primary compliance risk/red flag/control concern?

• A. Best execution risk from the proprietary desk’s routing decisions
• B. Regulation M stabilization risk from proprietary market-making activity
• C. Inability to evidence timely tender-offer restrictions and a documented trading investigation
• D. Research analyst registration risk from investment banking “talking points”

Best answer: C

Explanation: Tender-offer activity heightens MNPI and trading-restriction risk, so regulators expect a clear, time-stamped record of restrictions, notifications, approvals, and any investigation triggered by alerts. Here, the log is blank on the core control steps and no case documentation exists despite a trading spike. The primary red flag is the supervisory and documentation gap around tender-offer restrictions and the follow-up investigation.

Question 12

Topic: Function 9 — Sales Practice - Solicitations

To better integrate communications controls into enterprise supervision and annual compliance training, a broker-dealer implements this feature: completion of the annual “Retail Communications & Social Media” course in the firm’s LMS automatically enables access to the firm’s approved social publishing tool; if the course lapses, access is suspended and the supervisor receives an exception report.

Which option best matches the function of this feature?

• A. Post-use surveillance sampling of communications for policy breaches
• B. Filing all retail communications with FINRA prior to first use
• C. Principal pre-approval of each retail communication before use
• D. Training-gated access control with supervisory exception escalation

Best answer: D

Explanation: This feature combines annual training with a preventive communications control by conditioning access to an approved communications channel on training completion. It also supports enterprise supervision by generating an exception report to the supervisor when the training requirement is not met, creating auditable evidence of monitoring and follow-up.

Question 13

Topic: Function 3 — Broker-Dealer Operations

Which statement is most accurate about designing controls for electronic broker-dealer books and records to be complete, tamper-evident, and retrievable for regulatory examinations?

• A. Meeting the objective requires preserving required records in an immutable, tamper-evident manner (with evidence of any changes) and maintaining indexing/search and prompt export capability to produce complete records on request.
• B. A nightly encrypted backup is sufficient because encryption prevents records from being altered.
• C. A password-protected shared drive satisfies tamper-evident retention as long as only Compliance has access.
• D. If employees can print emails on demand, the firm does not need to retain electronic versions in a dedicated recordkeeping system.

Best answer: A

Explanation: Sound electronic recordkeeping controls focus on outcomes: required records must be preserved so they cannot be silently altered or deleted, and the firm must be able to locate and produce them quickly for an examination. Immutability/tamper-evidence must be paired with indexing/search and export processes that support complete, timely production.

Question 14

Topic: Function 2 — Markets and Operations

An equity surveillance alert flags repeated order-entry and cancellations in a thinly traded stock from one branch. The alert notes that the orders were entered under registered rep RR123’s credentials, but the firm’s physical-access log shows RR123 was out of the office that day and only the branch sales assistant (not registered) badged into the suite.

Which is the primary compliance red flag/control concern that should be coordinated with branch supervision, employee supervision, and the registration team?

• A. Potential manipulative layering/spoofing in the stock
• B. Use of a registered rep’s credentials by an unregistered person to enter orders
• C. Best execution failure due to venue selection
• D. Late or inaccurate trade reporting to the tape

Best answer: B

Explanation: The key red flag is the control breakdown showing orders entered under a rep’s credentials while the rep was not present and an unregistered assistant was. That raises risk of an unregistered person effecting/processing transactions, improper delegation, and weak supervisory controls over system access. Those outcomes must be handed off for branch review, employee conduct review, and registration/role analysis.

Question 15

Topic: Function 8 — Sales Practice - Customer/Employee Accounts

A retail customer emails a registered representative and the branch manager alleging the representative forged the customer’s signature to move funds and caused an unauthorized transfer, with an estimated loss of $75,000. The branch manager forwards the email to Compliance the same day.

Which action by the compliance official is NOT appropriate under FINRA complaint recordkeeping and reporting expectations?

• A. Log the matter as a written customer complaint and retain the original email and attachments
• B. Escalate to the designated complaint supervisor to assess regulatory reporting and document the determination
• C. Let the representative resolve it directly and delete the email if the customer is reimbursed
• D. Open an investigation file, acknowledge receipt to the customer, and track the matter through documented closure

Best answer: C

Explanation: A written allegation of misconduct received by any associated person must be captured in the firm’s complaint process, preserved as a record, escalated for supervisory review, and evaluated for any required regulatory reporting. Resolution (including reimbursement) does not eliminate the obligation to retain the complaint and document the firm’s investigation and outcome.

Question 16

Topic: Function 2 — Markets and Operations

A broker-dealer’s compliance team documents its quarterly best execution review using only a broker’s aggregated “average execution price vs. NBBO at time of fill” report. The firm does not retain order-level data by order type/size, time-in-force, venue, execution speed, fill rates, or routing/venue fee-and-rebate impacts.

During a FINRA exam, the firm is asked to evidence how it evaluated routing and execution quality across venues and order handling instructions. What is the most likely outcome?

• A. The firm can satisfy the request by producing customer confirmations and monthly commission summaries
• B. The review is sufficient as long as the firm discloses its routing practices on its public website
• C. No supervisory concern exists if the firm’s customers did not submit execution-related complaints
• D. FINRA is likely to cite an inadequate best execution review and require remediation to capture and analyze order-level routing and execution quality data

Best answer: D

Explanation: Best execution supervision requires a review that can compare routing decisions and execution quality across venues and order handling instructions. If the firm cannot produce order-level data and relies only on aggregated averages, it generally cannot demonstrate a regular and rigorous review. The likely consequence is an examination finding, with required enhancements to data retention, analysis, and documentation.

Question 17

Topic: Function 5 — General Supervision

Which description best defines a broker-dealer’s supervisory architecture (supervisory system) for purposes of assigning supervisory responsibilities?

• A. A documented structure that assigns supervisory duties by business line and location, with clear escalation and review responsibilities
• B. An annual compliance testing calendar maintained by the compliance department
• C. A written code of ethics that restricts employee trading and gifts and entertainment
• D. A risk-based surveillance tool that detects trade manipulation and automatically blocks orders

Best answer: A

Explanation: A supervisory architecture is the firm’s documented framework for who supervises which activities across business lines and offices, and how supervision is evidenced through review and escalation. The defining feature is clear responsibility and accountability for day-to-day supervision, not just general compliance standards or periodic testing.

Question 18

Topic: Function 2 — Markets and Operations

Your firm is a selling group member in a follow-on equity offering for XYZ. Investment Banking tells Compliance the distribution is in progress and the firm is subject to a restricted period for XYZ.

Exhibit: Surveillance snapshot (same day)

Time     Desk      Action                 Side  Qty   Marking/Notes
10:12    Prop Eq   Proprietary trade      BUY   8,000 "value add liquidity"
10:35    Client    Customer order routed  SELL  5,000 Short sale marked LONG
11:08    Prop Eq   Proprietary trade      BUY   6,000 "support the market"

As the compliance official triaging this issue, which statement/action is NOT an appropriate first-response compliance step under the dominant SEC rule concern?

• A. Notify Investment Banking/syndicate and confirm whether any permitted stabilization is planned and properly controlled
• B. Treat it primarily as a Regulation SHO marking/locate issue and allow proprietary buying to continue
• C. Direct the desk to pause bids/purchases in XYZ pending a Regulation M restricted-period assessment
• D. Preserve and review order tickets, short-sale markings, and any locate/borrow documentation for the client sell order

Best answer: B

Explanation: The dominant SEC concern is Regulation M: distribution participants must avoid trading that could artificially influence the market for the security during the restricted period. A proper first response is to stop potentially prohibited bidding/purchasing and escalate to confirm restricted-period status and permitted activities. Reg SHO issues may also exist, but they should not justify continuing proprietary buying while Regulation M risk is unresolved.

Question 19

Topic: Function 4 — Credit Regulation/Capital Requirements

A FINRA member broker-dealer has a minimum net capital requirement of $250,000. Midday, Finance recalculates net capital at $180,000 due to an operational loss, and expects a capital infusion tomorrow morning. The CEO instructs staff to wait to notify FINRA “unless we’re still below the requirement at the end of the week,” and to continue normal business in the meantime.

What is the most likely compliance outcome if the firm follows the CEO’s instruction?

• A. No notice is required if the firm expects to cure the deficiency within one business day
• B. The firm’s primary obligation is to notify customers and return all customer funds immediately
• C. A prompt regulator notice is required; delaying it creates a net capital reporting violation and likely triggers remediation/restrictions until cured
• D. Notice is only required on the next FOCUS filing because the deficiency was identified intraday

Best answer: C

Explanation: Once the firm knows it is below its required minimum net capital, the playbook should treat it as a regulatory-notification and escalation event. Waiting for a later checkpoint (end of week) is inconsistent with prompt notice expectations and can itself be a violation. The firm should move immediately to documented remediation (capital restoration and, as applicable, activity limits) until the deficiency is cured.

Question 20

Topic: Function 7 — Registration

Which statement is most accurate regarding data quality controls for initial submissions and amendments filed through FINRA systems (for example, Web CRD)?

• A. To preserve an audit trail, firms should not amend filings and should instead keep a memo in the personnel file.
• B. Once a filing is accepted by the system, no further data review is needed.
• C. For amendments, a representative’s verbal confirmation is sufficient support for updating the filing.
• D. Firms should validate required fields pre-submission and review system rejects/deficiencies post-submission, correcting filings with documented support.

Best answer: D

Explanation: Sound data-quality controls for FINRA system filings combine front-end validation (completeness and internal reasonableness checks) with back-end monitoring (reject/deficiency queues) to ensure the record is accurate after submission. When errors are identified, firms should amend/resubmit and retain evidence showing who reviewed the issue and what documentation supported the update.

Question 21

Topic: Function 6 — Investment Banking

Your firm is the placement agent for an ongoing Regulation D private placement that has been open for four months. Compliance reviews the weekly exception log and sees repeated flags for the same two representatives: missing accredited-investor verification evidence, several customers concentrated above the firm’s internal limit for this product, and sales emails containing non-approved performance projections. In the surveillance tool, the branch manager closes each alert as “addressed with rep—OK to proceed,” but there are no retained emails/notes, no escalation record, and no documented remediation (e.g., customer re-contact, reversals, rep discipline, or updated training).

Which is the PRIMARY compliance red flag/control concern?

• A. Lack of documented supervisory review, escalation, and remediation for repeated offering exceptions
• B. Risk of market manipulation in the issuer’s securities during distribution
• C. Issuer’s failure to make required state blue-sky filings
• D. Failure to report secondary-market trades in the private placement security

Best answer: A

Explanation: An ongoing offering requires the broker-dealer to show that it is actively supervising sales activity and responding to red flags. Here, the key problem is not just that exceptions exist, but that closures are “verbal” with no retained evidence, no escalation trail, and no documented remedial outcomes. That creates an un-defensible supervisory record and allows repeat issues to continue unchecked.

Question 22

Topic: Function 2 — Markets and Operations

A broker-dealer operates a proprietary market-making desk and a retail customer order flow business. After a technology migration, the firm’s surveillance tool monitors customer orders and proprietary orders in separate queues and cannot link them by symbol, time, trader, or routing strategy.

During a weekly review, Compliance sees a spike in short-lived displayed orders (posted and canceled within seconds) in several thinly traded equities on the proprietary desk, while retail customer orders in the same symbols are being routed to multiple venues at the same times.

Which is the PRIMARY compliance risk/red-flag and monitoring control concern the firm should address?

• A. Insufficient customer suitability review for thinly traded equities
• B. Gaps in cross-activity surveillance for manipulation or trading ahead
• C. Improper registration status for proprietary traders on the desk
• D. Late trade reporting to a TRF causing tape inaccuracies

Best answer: B

Explanation: The key risk is a supervisory gap in risk-based surveillance that spans both proprietary and customer activity. When systems cannot correlate orders across accounts, traders, symbols, timing, and routing, the firm may miss manipulative patterns (like layering/spoofing) and conflicts such as trading ahead of customer flow. A consolidated, order-lifecycle monitoring framework is the primary control need here.

Question 23

Topic: Function 4 — Credit Regulation/Capital Requirements

You are the FINOP-designated compliance official at a clearing broker-dealer that carries retail margin accounts. Your WSP requires same-day escalation when the daily required-margin record shows (1) any single account deficiency over $25,000 or (2) the same account deficient for 2+ consecutive business days, and requires documentation for any manual override.

Exhibit: Daily required-margin exceptions (T+1 settled positions)

Acct   Deficiency  Days deficient  Manual override note
1A72   $41,800     3              "Pricing feed lag—use yesterday close"
4C19   $9,600      1              (none)
7D55   $28,200     2              "Temporary—client wiring"

Which action is the single BEST compliance decision for today that satisfies the WSP and reduces regulatory risk under FINRA Rule 4220?

• A. Raise the escalation thresholds to reduce false positives
• B. Issue margin calls and review exception trends at month-end
• C. Escalate both flagged accounts, evidence overrides, and open a pricing issue
• D. Rely on the margin desk’s overrides and retain only the final file

Best answer: C

Explanation: FINRA Rule 4220 expects firms to maintain an accurate daily required-margin record and to act on deficiencies and control breaks shown by that record. Here, two accounts trigger the WSP’s same-day escalation rules, and one includes a potentially systemic data-quality issue (pricing feed lag). The best decision escalates, documents overrides, and initiates remediation and trend follow-up.

Question 24

Topic: Function 7 — Registration

Which event is most clearly a trigger for a broker-dealer to file an amended Form BD because previously filed information has changed?

• A. The firm completes its annual compliance meeting
• B. A registered representative changes a home address
• C. The firm updates its written supervisory procedures
• D. A new owner acquires 25% of the firm’s voting securities

Best answer: D

Explanation: Form BD must be amended when key broker-dealer information becomes inaccurate, including changes in ownership or control. An acquisition that results in a new control person is a core example of a business-model/control change that must be reflected on the firm’s broker-dealer registration. Internal compliance activities or individual rep updates generally belong in other records or forms.

Series 14 compliance officer map

Use this map after the sample questions to connect individual items to compliance governance, surveillance, written procedures, conflicts, reporting, and remediation decisions these Securities Prep samples test.

    flowchart LR
	  S1["Rule change exception or compliance issue"] --> S2
	  S2["Identify obligation and impacted business area"] --> S3
	  S3["Design policy surveillance and controls"] --> S4
	  S4["Test evidence and root cause"] --> S5
	  S5["Escalate report and remediate"] --> S6
	  S6["Update training monitoring and records"]

Quick Cheat Sheet

Mini Glossary

• Supervision: Firm process for review, approval, escalation, and evidence of compliance.
• Communications: Retail and institutional content subject to approval, recordkeeping, and fair-balanced standards.
• AML: Anti-money laundering controls for identifying, monitoring, and reporting suspicious activity.
• Research report: Written analysis with investment views, disclosures, conflicts, and supervisory requirements.
• Underwriting: Investment banking process for structuring, pricing, distributing, and settling offerings.

In this section

• Series 14: Regulatory Agencies
  Try 10 focused Series 14 questions on Regulatory Agencies, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Markets and Operations
  Try 10 focused Series 14 questions on Markets and Operations, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Broker-Dealer Operations
  Try 10 focused Series 14 questions on Broker-Dealer Operations, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Credit and Capital
  Try 10 focused Series 14 questions on Credit and Capital, with explanations, then continue with the full Securities Prep practice test.
• Series 14: General Supervision
  Try 10 focused Series 14 questions on General Supervision, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Investment Banking
  Try 10 focused Series 14 questions on Investment Banking, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Registration
  Try 10 focused Series 14 questions on Registration, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Customer and Employee Accounts
  Try 10 focused Series 14 questions on Customer and Employee Accounts, with explanations, then continue with the full Securities Prep practice test.
• Series 14: Sales Solicitations
  Try 10 focused Series 14 questions on Sales Solicitations, with explanations, then continue with the full Securities Prep practice test.
• Free Series 14 Full-Length Practice Exam: 110 Questions
  Try 110 free Series 14 practice questions across the official topic areas, with answers and explanations, then continue with the full Securities Prep question bank.