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Question (Relevant to the Series 7, Series 24, Series 27, Series 62, Series 79, Series 82, and Series 99):
Jenny is an employee of a broker-dealer. She is a receptionist at the firm and is not a registered representative. She would like to purchase shares in an IPO that she has recently heard about at her office. Which of the following BEST describes her participation?
A. Jenny may purchase shares of the IPO on the same basis as other customers.
B. Jenny is prohibited from purchasing shares of the IPO, but her spouse who she supports may purchase shares on the same basis as other customers.
C. Jenny may purchase shares of the IPO as long as the purchase quantity doesn’t exceed 200 shares.
D. Jenny is prohibited from purchasing shares of the IPO.
Correct Answer: D. Jenny is prohibited from purchasing shares of the IPO.
Rationale: FINRA Rule 5130 – Restrictions on the Purchase and Sale of Initial Equity Public Offerings – prohibits a member firm (broker/dealer) from selling shares of an IPO to an account in which a “restricted person“ has a beneficial interest, subject to certain limited exceptions. All employees of a broker-dealer are considered “restricted persons“ under the rule.
Congratulations! This month’s winner is Alexandra K.
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