SIE Overview of the Regulatory Framework Question 6: Answer and Explanation

Question: 6

Which of the following does FINRA Rule 3270 (Outside Business Activities of Registered Persons) require a member firm to consider before approving an outside business activity (OBA)?

• A. Will the OBA be perceived by outsiders as part of the member's activities?
• B. Will the OBA take too much of the registered person's time away from that person's family?
• C. Will the OBA lead to the registered person initiating similar, additional OBAs?
• D. Will the OBA lead to the registered person leaving the association with the member firm?

Correct Answer: A

Explanation:

A: Before approving an outside business activity (OBA), a member firm must consider whether the OBA could be perceived by outsiders as part of the member's activities. Choices B, C, and D are not required by FINRA to be considered even though they may be reasonable considerations.