General Securities Sales Supervisor (Series10) Practice Exam

What is the primary role of the FINRA Code of Procedure?

1. To handle disputes between member firms

2. To resolve trade practice complaints

3. To oversee settlements

4. To manage errors in securities deliveries

The correct answer is: To resolve trade practice complaints

The primary role of the FINRA Code of Procedure is to establish guidelines and processes for resolving trade practice complaints. This code provides a structured framework for handling complaints related to violations of industry rules, regulations, and policies. It outlines the procedures for the investigation of these complaints, the enforcement of regulatory standards, and the potential penalties for non-compliance. Every registered representative and member firm must adhere to these procedures, ensuring that any allegations of misconduct are managed fairly and systematically. By having a defined process in place, FINRA promotes transparency and accountability in the securities industry, enabling it to maintain investor trust and market integrity. The other options relate to aspects of FINRA's functions but do not encapsulate the primary role of the Code of Procedure. For example, while handling disputes between member firms and overseeing settlements are important, those are just components of the broader objectives of trade practice compliance. Managing errors in securities deliveries also falls outside the specific scope of procedural guidelines for complaints under the Code.