ABA-Certified Regulatory Compliance Manager - CRCM Set 9

Question - 13 Maximum mark : - 28

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ABA-Certified Regulatory Compliance Manager - CRCM Set 9

Of the following actions, which one is NOT recommended by the OCC's advisory letter as a necessary tool of management oversight of insurance and annuity sales?

Hiring competent personnel ✘ Establishing a separate insurance agency ✘ Auditing systems and controls ✘ Requiring a member of management to actively oversee this function ✔

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Answer: Option B

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Of the following practices, which one is NOT accepted in insurance and annuity sales?

Reviewing insurance company ratings ✘ Monitoring customer complaints against insurance companies ✘ Verifying that personnel are properly licensed ✘ Churning accounts ✔

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Answer: Option B

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Which of the following is NOT a requirement of the Interagency Statement on Retail Sales of Nondeposit Investments?

That employees selling nondeposit investments receive special training on the products they sell ✘ That all bank employees receive special training on the nondeposit investment products sold by the bank ✘ That employees selling nondeposit investments ensure that the product is suitable to the customer purchasing it ✘ That the history of employees selling nondeposit investments be checked before their employment ✔

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Answer: Option B

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Which of the following bank policies does NOT comply with the Interagency Policy Statement on the Retail Sales of Nondeposit Investments?

Supervisors and sales personnel will receive compensation based on the volume of sales each department achieves as well as the effectiveness of the
department's ability to find suitable investments for customers. ✘ All bank employees engaged in the sale of nondeposit investments will provide the bank's required disclosures to all customers before the purchase of anondeposit investment product. ✘ No teller will discuss nondeposit investment products with a bank customer. ✘ Tellers and new accounts personnel will receive a $25 fee for all customers referred to the nondeposit investment department on the customer's purchase of aninvestment product. ✔

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Answer: Option B

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State National Bank has a Web site on which it advertises all of its products. One page of the Web site is devoted to the products of its affiliate, State National Investment Products, Inc. The affiliate sells uninsured mutual funds and various other investments not insured by the FDIC. What are State National's responsibilities for this advertising?

None. The affiliate is responsible. ✘ None. Because it is a Web site, the advertising rules do not apply. ✘ The bank must make sure the FDIC logo is properly placed. ✘ The bank must make sure that the noninsured disclosures are on this page and that the FDIC logo does not appear. ✔

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Answer: Option B

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Which of the following bank products is NOT subject to the disclosure provisions of the Interagency Statement on Retail Sales of Nondeposit Investment Products?

Fixed-rate annuities ✘ Variable-rate annuities ✘ Variable-rate savings accounts ✘ Mutual funds ✔

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Answer: Option B

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Under the Interagency Statement on Retail Sales of Nondeposit Investment Products what disclosure must the bank's investment sales representative make to the customer?

The bank's regulatory agency ✘ The sales commission resulting from the investment purchase ✘ That the investment product is not guaranteed by the bank ✘ The arbitration procedure for resolving disputes over investment advice ✔

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Answer: Option B

Solution:

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Under the Interagency Statement on Retail Sales of Nondeposit Investment Products, what may a bank teller do?

Discuss the past performance of a bank-related mutual fund ✘ Transfer mutual fund shares from an investment savings account to an IRA account ✘ Take the business card of a customer who has asked to purchase a bank-related mutual fund and give it to a licensed representative ✘ Assist a customer in determining eligibility to purchase a bank-related mutual fund ✔

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Answer: Option B

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A bank is considering canceling its agreement with a broker to which it currently leases space in its lobby. The new plan would include an agreement with a different broker, but bank employees would complete product sales. What should the compliance manager do FIRST?

Establish a licensing program for bank employees ✘ Establish a training plan for employees who will be selling the nondeposit investment products ✘ Obtain copies of SEC and NASD rules regarding nondeposit investment products ✘ Determine the additional compliance risk for the bank as a result of this change ✔

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Answer: Option B

Solution:

It provides fallback for IE8.

10.

Which of the following advertising activities indicate that a bank would NOT be exempt from SEC registration requirements?

Listing its securities transfer services as a service the bank provides for IRA accounts along with other IRA benefits ✘ Listing its securities services for trust accounts in the bank's extensive trust services brochure ✘ Mentioning in a print advertisement that the bank provides accommodation securities trades for its regular custodial accounts ✘ Stating in an advertisement concerning employee benefit plan services that the bank provides securities brokerage services for employee benefit plan accounts ✔

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Answer: Option B

Solution:

It provides fallback for IE8.

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