Matt is a registered representative with Fine, Howard, Fine and Associates. Tom, an old fraternity brother,
is one of his clients. Business has been bad, and Matt is going to have difficulties making this month's
mortgage payment. Tom was commiserating with him when the two hooked up to have a couple of beers
together and offered to lend Matt some money to see him through the rough times. Based on these facts:

• A. Matt can accept the offer without having to obtain pre-approval from his employer since he and Tom
  are former fraternity brothers and their friendship pre-dates their agent/client relationship.
• B. Matt can accept the offer as long as Tom will not need to sell any investments to lend Matt the money.
  This would constitute a conflict of interest.
• C. Matt can accept Tom's offer, but only after obtaining pre-approval from Fine, Howard, Fine.
• D. Matt must refuse Tom's offer since Tom is one of his clients.

Which of the following represents a secondary market transaction?

• A. An investor sells her shares of Sunvalley Solar, Inc. (SSOL), which sells on the OTC Bulletin Board for
  $ 0.059 a share.
• B. An investor buys Treasury bills in the regular Monday auction.
• C. An investor buys 300 shares of Electromed (ELMD) at its IPO offer price of $4.00 a share.
• D. A home buyer obtains a mortgage through his savings and loan.

Which of the following statements about specialists is false?

• A. Specialists are employees of the exchange on which they oversee trades.
• B. Specialists are market makers in assigned stocks and, as such, can profit from these investments.
• C. In addition to acting as market makers, specialists also act as agents and execute limit orders placed
  by commission brokers for their clients if the specified price is reached.
• D. Specialists are required to maintain a fair and orderly market in their assigned stocks, meaning that
  they must buy if there is an excess of sell orders and sell out of their own portfolios if there is an excess of
  buy orders.

Mr. Schaker hasn't been seeing a lot of clients these days with the recent market downturn-which means
he hasn't been generating any commissions, and commissions are his bread and butter. So, Mr. Schaker
does some Googling on his computer and notes that a prominent family of load funds has just introduced
a new global fund. Scribbling the name and contact information of the fund family on his notepad, he
begins calling his existing clients and promoting the new fund, encouraging his clients to redeem some
shares in their existing funds to invest in this fund. Has Mr. Schaker violated any securities laws?

• A. Yes. Mr. Schaker is recommending the fund to his existing clients to benefit himself, not them.
• B. No. Research indicates that new funds tend to offer abnormally high returns for the first 12 months of
  their existence, so Mr. Schaker is doing his clients a favor even if he himself stands to profit.
• C. No. In FINRA's rules regarding fair dealing with customers, the SRO clearly states that "This does not
  mean that legitimate sales efforts in the securities business are to be discouraged. . . "
• D. Yes. A registered representative should always refrain from recommending shares of a load fund;
  trades involving load funds should always be "unsolicited."