SIE Overview of the Regulatory Framework Question 13: Answer and Explanation

Question: 13

Which of the following statements is correct regarding FINRA Rule 2263 – Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4?

• A. A person signing a U4 filing must be informed that arbitration will be used for disputes.
• B. A person signing a U4 filing must be informed that arbitration will not be used for disputes.
• C. A person signing a U4 filing must be informed that arbitration may be used for disputes.
• D. A person signing a U4 filing must be informed that arbitration will not be used for disputes involving felonies.

Correct Answer: A

Explanation:

A: Choice A is correct because a person signing a U4 must be informed that, by signing the U4, the person is giving up certain rights to take disputes to court. Choices B, C, and D are incorrect because FINRA Rule 2263 – Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4 requires that the person signing a U4 filing must be informed that arbitration will be the only method used for resolving any disputes that might, in other circumstances, be settled in a court.